December 8, 2011
Factories planned in Brazil for low-cost housing material
By Mimi Whitefield | McClatchy Newspapers
MIAMI — After Haiti's 2010 earthquake, Miami Beach-based InnoVida Holdings promised it would be a big part of the solution with its lightweight composite panels that could quickly be assembled into homes impervious to hurricanes and quakes.
It said it would set up a Haitian factory that could churn out enough material to build 10,000 homes a year. But in March that dream crumbled as founder Claudio Osorio and his wife Amarilis were forced to file for Chapter 11 bankruptcy after a judge ruled that Osorio had not produced financial records in connection with a lawsuit against the company by an investor.
Now the secret formula for the resin panels that were the key part of the InnoVida process has quietly slipped away in a bankruptcy auction. And Millport Associates - the company that acquired the resin formula, patents and the rest of InnoVida's intellectual property - has big plans.
While it hasn't turned its back on Haiti, initially Millport's main focus will be Brazil, where it sees huge potential in building low-cost homes, said Walter Rest, the company's director for worldwide development.
The company plans at least four factories in Brazil in the next three years to manufacture the reinforced structural panels that have been rebranded as Inovatec, Rest said in a telephone interview from Brazil, where Millport's parent company, Inepar, is located.
Inepar is an industrial conglomerate with interests in electric power generation and distribution, telecommunications, petroleum, gas and manufacturing.
Millport also has leased 25,000 square feet in the Miramar, Fla., Park of Commerce for a U.S. showroom and research-and-development center. Some manufacturing will take place at the South Florida facility.
Osorio, who is a native of Venezuela, once called the resin to make the panels, which are akin to high-performance materials used in the aerospace and marine industries, InnoVida's "Coca-Cola formula."
With promises of a low-cost, efficient solution to the developing world's housing shortages and assurances about the financial health of InnoVida, Osorio was able to attract investors such as NBA star Carlos Boozer, retired Miami Heat center Alonzo Mourning, and Miami-Dade businessman Chris Korge, who sank $4 million into the company.
"It was a beautiful story and it is an excellent product, but it wasn't a well-managed company," Rest said.
Now investors and creditors are in hot pursuit of $50 million they say they're owed. Investors have filed a series of lawsuits, saying Osorio deceived them and built his company on fraud.
Millport was the only bidder for InnoVida's intellectual property, which includes not only the secret resin formula and numerous patents and trademarks but also vendor, customer and manufacturer lists, and architectural and engineering plans.
The purchase price was $500,000, and the sale was approved by the U.S. Bankruptcy Court on Aug. 18. Millport also filed a $3.93 million claim related to previous transactions with InnoVida, said Antonio C. Rodrigues do Amaral, Millport's lawyer.
The latest bankruptcy reorganization plan, filed in September, said the resin formula is "key to the manufacturing process," but it did not mention that trade secrets had been sold to Millport. It did say, however, that the Osorios are prepared "to go forward for the first time with a non-petroleum-based resin."
Under that plan, Osorio would be allowed to restart his company under the name SPV, and attempt to revive manufacturing deals in Haiti, the United Arab Emirates, Oman and Turkey.
SPV, the plan said, would be able to "generate sufficient funds to pay" creditors in the next five years. The couple's Miami-area estate has already been sold to repay creditors and investors.
Hold on, Millport said. In a late October filing urging rejection of the reorganization, Millport complained that "Osorio proposes to establish a new venture with precisely the assets" it purchased and "any such manufacture or use would amount to misappropriation of Millport's trade-secret rights."
But Geoffrey Aaronson, the Osorios' bankruptcy lawyer, said the resin formula SPV plans to use is "entirely different and it is not proprietary."
"The new company is not based on the intellectual property sold to Millport by the trustee," he said in an email.
Korge's lawyer, Kendall Coffee, also has questioned whether a company that he says is riddled with fraud could or should be resurrected.
Because of the objections, the bankruptcy court ordered the Osorios to file a revised reorganization plan and disclosure statement and scheduled a hearing for next week.
With the backing of Inepar, Millport has already made improvements in the manufacturing of the panels, which are fireproof, mold-proof and light enough to be assembled without heavy equipment.
"Think of it as a car manufacturing facility for housing" with the final product delivered in a kit form, Rest said.
Last week, a 452-square-foot model went up in a few days in Curitiba, Brazil, where Inepar is headquartered.
The unit was built according to specifications for the Brazilian government's Minha Casa, Minha Vida (My Home, My Life) program. The Brazilian Inovatec system homes will cost around $20,000, said Rest.
With a housing deficit of about 8 million homes, Brazil has a goal of building 2 million houses for low-income families by 2014 under the recently expanded Minha Casa, Minha Vida program.
It offers subsidized mortgage payments as well as incentives for the companies building the homes.
"It's a little bit of a race against time. Brazil is on fire in terms of the social housing market," Rest said. The Brazilian experience, he said, will be used as a platform to expand worldwide.
Millport also expects to be involved in the rebuilding process in Haiti. "We're in the process of negotiating our first contract with a Haitian client," Rest said.
Millport will service the Caribbean out of its Miramar facility, which will employ about 35 people. Rest said manufacturing is expected to begin there by the end of the first quarter of 2012.
"There really was nothing wrong with the InnoVida process," Rest said, "but it needed more money invested in the manufacturing process to automate it and to make it more cost-efficient."
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