Perseus leads $160m investment in specialty car maker

The Washington DC-based firm will provide growth equity to Three Seasons Capital-backed Vehicle Production Group, which has created a car for individuals with mobility problems, as well as taxis and other specialty markets. In related news, Perseus has likely lost out on its bid for bankrupt Frontier Airlines.

Private equity firm Perseus has led a $160 million (€107 million) equity financing round in Vehicle Production Group (VPG), a developer of specialty vehicles for the disabled.

The Washington DC-based firm made the investment out of its sixth fund, which closed on $600 million in 2006.

Troy, Michigan-based VPG designs, developers and markets a host of specialty vehicles designed to meet the needs of the North American taxi fleet market, commercial and municipal paratransit markets and the consumer retail market for individuals with mobility problems.

The company will use the fresh capital for continued engineering improvements, production tooling, and vehicle testing.

VPG will represent one of the earliest-stage companies in Perseus’ portfolio.

The company was seeded in 2006 by venture capital firm Three Seasons Capital, which helped VPG design a vehicle prototype and assemble an early management team.

Three Seasons will remain a minority shareholder in VPG, as will Clean Energy Fuels, the natural gas company founded by T Boone Pickens. Both Clean Energy Fuels and Pickens have committed $10 million each.

VPG is currently working with Clean Energy Fuels on marketing and technical support for its vehicles, which will be assembled in a plant in Indiana.

The vehicle includes an integrated automatic ramp that provides access for wheelchairs and other mobility-assistance devices.

In related news, Perseus’ bid for bankrupt US commercial airliner Frontier Airlines has appeared to lose out to an offer from a rival consortium.

Perseus had agreed to supply $75 million in debtor-in-possession financing for Frontier, as well as a $100 million equity commitment to help steer the company through its Chapter 11 reorganisation plan.

Indianapolis-based Republic Airways Holdings, Credit Suisse and Greenwich, Connecticut–based AQR Capital have also offered $75 million in debtor-in-possession, including an immediate commitment of $30 million. All three members of the consortium are unsecured creditors of Frontier.

In a statement, Frontier president Sean Menke voiced his support for the Republic Airways plan. The new agreement awaits approval in federal bankruptcy court.