AM General reached an agreement with the U.S. Department of Energy to acquire Michigan-based Vehicle Production Group, the troubled developer and manufacturer of the MV-1, a vehicle designed for passengers in wheelchairs.
VPG was awarded a $50 million loan in March 2011 from the Energy Department's Advanced Technology Vehicles Manufacturing program. It suspended operations in May because of financial setbacks and said it was seeking a buyer.
Financial terms were not released but AM General bought the department's secured loan for $3 million, The Detroit News reported.
A new company created as part of the purchase agreement, Mobility Ventures LLC, will acquire VPG's assets, AM General said in a statement Thursday.
MV-1 production, sales and product development are expected to resume in about 45 days. Assembly of the vehicles will continue at AM General's plant in Indiana.
While the transaction is being finalized, AM General will provide service parts and technical support to MV-1 dealers and distributors in the United States and Canada, the company said.
The News said the U.S. government will lose tens of millions of dollars on the Energy Department loan.
"After exhausting any realistic possibility for a sale that might have protected our entire investment, the Department determined that auctioning the remainder of VPG's loan obligation offered the best possible recovery for the taxpayer," Energy spokesman Bill Gibbons told the paper Thursday. "We are pleased that -- consistent with the intent of the loan -- AM General has committed to the continued production of these very popular, handicap-accessible, natural gas-powered fleet vehicles in Indiana."
VPG attracted some of the U.S. auto industry's most senior talent after it was formed in 2006, including former CEOs Dave Schembri, one-time head of marketing for Mitsubishi and president of Smart USA, and Mark Hogan, a former General Motors executive who became a Toyota Motor Corp. director in June.