US division of Sarla Fibres closes $13mn in NMTC financing

Sarla Performance Fibers, based in Mumbai, India, began installing equipment and rehabilitating the facility in early 2013 under the name SarlaFlex Inc. The first phase of the new plant is expected to be fully operational in the first quarter of 2014.

The parent company has been in business for 25 years, with international operations in Honduras, Turkey, Portugal, Thailand and Vietnam. The SarlaFlex Inc. subsidiary will run the new manufacturing facility, which will make polyester thread and yarn products primarily for international apparel and upholstery customers.

The facility is located in a highly distressed rural area with a 25.4% poverty rate and 17.6% unemployment rate. SarlaFlex Inc. currently employs 72 people to initiate trial runs and setup production, and anticipates employing a total of 150 individuals by the end of 2014.

"The New Markets Tax Credit program has been a great help for Sarla to complete its U.S. project and step up its manufacturing and hiring plans," said Bobby Downs, president of SarlaFlex Inc. "With NMTC financing, we will have critical working capital to accelerate hiring, increase inventory purchases, and position the company to attract conventional capital which, due to the company's start-up status in the U.S., has been nearly impossible to arrange."

NMTCs were established by Congress in 2000 to stimulate investment and economic growth in designated low-income communities. They raise investor capital and leverage public and private funding to provide borrowers, like SarlaFlex, with financing in the form of favorable rates and flexible below-market terms. NMTC financing will allow SarlaFlex to continue focusing on its expansion and provide new employment opportunities in Colleton County.

"South Carolina lost roughly 38 percent of its overall manufacturing between 2000 and 2011, but has since been recovering those lost jobs and revenue by targeting manufacturing companies, including textile manufacturers," said NNMF President Deborah La Franchi. "Our NMTC investment in SarlaFlex will spur the creation of high-quality jobs, while transforming a severely distressed community."

NNMF CEO Belden Hull Daniels added, "We are pleased to contribute funding for the first phase of the SarlaFlex project, while helping continue the region's textile manufacturing tradition."

The project is part of South Carolina's larger redevelopment efforts to attract manufacturing businesses that can operate effectively in rural areas. SarlaFlex Inc. is formally collaborating with Colleton County on retraining and rehiring 70 employees who were laid off as a result of the local Walterboro Veneer plant closure in February 2013. The new facility also anchors a commercial park that is anticipated to attract other companies and help catalyze critical economic development.

"The SarlaFlex project aligns with South Carolina's goal of strengthening manufacturing in its rural communities," said Laura Vowell, vice president for U.S. Bancorp Community Development Corporation, the community development subsidiary of U.S. Bank. "We're proud to utilize NMTCs to address stakeholder's needs and support the state's ongoing economic development."

National New Markets Fund