Abu Dhabi $30m bus JV in doubt as company folds

The Eco-Smart was planned as a UAE-manufactured vehicle

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The future of a joint venture between manufacturer DesignLine and Abu Dhabi’s Liberty Automobiles is in doubt after the bus maker's New Zealand operation was put into liquidation.

The $30 million JV was planning to make the UAE the home of the world’s first 100% electric bus, with production due to begin in January 2012.

DesignLine had been unable to service its estimated debts of $10 million and was trying to search for a buyer of its assets after creditors called in their debts. BNZ, the secured lender to DesignLine, once New Zealand's biggest bus maker, has appointed Keiran Horne and Craig Melhuish of HFK chartered accountants, to oversee the sale.

The annoucement suggests company's US parent operation has failed to sell its New Zealand operation to an unamed Malaysian company. It has also failed to win more time with the High Court in New Zealand which is presiding over a case involving the company's creditors looking to claim back money owed.

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Counsel for creditors ENI Engineering (owed $870,000) and window manufacturer Lysaght Limited of Ashburton (owed $975,000), told the High Court in New Zealand, that DesignLine “appeared to be trading while insolvent and probably had been for some time”.

DesignLine President and CEO Brad Glosson had moved to distance the US operation from the troubled New Zealand operation, explaining that DesignLine was looking to sell its interest to the unnamed buyer.

"The company is selling its New Zealand subsidiary and has negotiated a deal which will close on or before June 20,” he said in a statement. “The company is divesting DesignLine New Zealand because its markets have not migrated from diesel to electric as fast as other regions in which we operate."

The court susbequently declined an appeal to adjourn its decision for two weeks while a possible sale to Malaysian interests was negotiated. It is unclear whether this was the same buyer Glossen referred to.

However Frampton told the court that her clients could not support giving more time to DesignLine because it had been told the sale was a possibility in February but they not seen “a presentation of a contract or detail of the possible buyer or purchase price”.

With Glossen yet to be available for comment, it remains unclear if the company will be able to continue to invest in the Abu Dhabi plant.

DesignLine was started in 1986 by Kiwi John Turton, who was bought out by the Glossen family in 2006 with the company headquarters moving to Charlotte. While establishing a plant in Charlotte, the Glossens invested in the New Zealand operation and moved it to a new facility in Rolleston, 20km south of Christchurch.