Did U.S. loan delay bring on Minnesota company's sale?

  • Article by: DAVID SHAFFER , Star Tribune
  • Updated: May 11, 2012 - 9:13 PM

No, the CEO of Faribault glassmaker Sage says about idea floated earlier by Sen. Al Franken.

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Hannah Szajner studied in the library at Century College in White Bear Lake, where the windows behind her are made of smart glass manufactured by Faribault-based SAGE Electrochromics. The windows change tint with the flip of a switch.

Photo: Glen Stubbe, Star Tribune

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The founder of high-tech window factory in Minnesota is denying a suggestion that two years of government foot-dragging over a promised loan guarantee triggered the company's sale to a French firm.

"We'd still be doing this deal," John Van Dine, chief executive of Sage Electrochromics, said in an interview when asked if the U.S. delay drove the company into the arms of a foreign suitor.

Sen. Al Franken, D-Minn., had said at a Senate committee hearing in February that the federal delay had left Sage "running out of time, and they may have to sell themselves to a French company."

The sale to French building products giant Saint-Gobain was announced Wednesday. Saint-Gobain had been a 50 percent owner of the company, which employs 125 workers in Faribault, Minn., making windows that save energy by changing their tint at the flip of a switch. Sage now becomes a subsidiary of Saint-Gobain and will remain in Faribault with Van Dine as CEO.

The sale comes more than two years after the U.S. Energy Department offered Sage a $72 million loan guarantee to help build a larger factory. The loan never closed, and the entire program faced Republican-led political scrutiny after the 2011 bankruptcy of a California solar company that had received a $535 million federal loan guarantee.

Sage went ahead with its $150 million factory in Faribault. It was helped by incentives from state and local governments and capital from Saint-Gobain, which had paid $80 million for its initial ownership stake. The factory, now "substantially complete," will employ 160 and begin shipping its trademark SageGlass next January, Van Dine said.

In February, at a Senate Energy and Natural Resources Committee hearing on the loan program, Franken questioned U.S. Energy Secretary Steven Chu about Sage's long wait. "Why is the Department of Energy continuing to delay closing and executing the Sage loan guarantee?" he asked.

Chu declined to elaborate, saying the information was confidential.

Van Dine said he doesn't know how the senator concluded that the U.S. delay would lead to the company's sale. "It certainly didn't come from me," said Van Dine, who thanked Franken for trying to help.

Franken's press secretary, Alexandra Fetissoff, said Friday that other Sage representatives had told the senator's office of the company's risk of being sold if it didn't get the U.S. loan. "Sen. Franken thinks Sage is a great company and is happy that they are staying in Minnesota," she added.

Ethanol producer Poet of Sioux Falls, S.D., also had waited for a promised $105 million federal loan guarantee to finance an advanced refinery that will make ethanol from inedible parts of corn plants. In January, Poet dropped that loan guarantee request and announced a 50-50 partnership with a Dutch company to finance and build the $250 million project now under construction in Emmetsburg, Iowa.

Van Dine said Sage would have accepted a federal loan, but no longer qualifies for it since the project is nearly complete.

He said the deal with Saint-Gobain makes business sense, and probably was inevitable. The French company also had developed tintable glass. Without the acquisition, Sage would be competing with "the biggest and most threatening competitor in the field," and Saint-Gobain "would be building a factory in France, he said.

He added that some of the early investors in Sage also were from outside the United States.

"The reality is that whoever the investor is we are creating jobs right here in the U.S., green manufacturing jobs," Van Dine said. As part of its acquisition, Saint-Gobain is investing an additional $90 million to boost Sage's global sales, he said. "We are going to ship products out of this plant around the world."

Though Sage didn't get its U.S. loan, the federal government did approve a $31 million advanced manufacturing tax credit, and it carries over to the new owners.

David Shaffer • 612-673-7090

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