Fisker green-car government loan heads to auction block

Reuters

By Deepa Seetharaman and Martinne Geller

DETROIT/LONDON, Oct 10 (Reuters) - The U.S. Department ofEnergy will consider bids to purchase Fisker Automotive'sgovernment loan on Friday in what could be the start of alengthy and expensive process to revive the dormant green-carstartup.

Fisker, which has not built a car in about 15 months, doesnot have enough money to pay millions in outstanding bills. Thecompany laid off most of its employees in April after runningshort of cash, a month after co-founder and executive chairmanHenrik Fisker resigned.

The Department of Energy (DOE) said last month that itplanned the auction after "exhausting any realistic possibility"that it could recoup the entire $168 million still owed byFisker.

Bids to buy Fisker's DOE loan were due Oct. 7 and an auctionis still planned for Friday, despite a U.S. government shutdownthat began 10 days ago.

Prospective bidders had to offer at least $30 million toqualify, with 10 percent down due with the bid, two people withknowledge of the process said on Thursday.

But restarting the company will cost considerably more. Areinstatement of Fisker's original plan to build several modelscould cost up to half a billion dollars, according to peoplefamiliar with the company's finances.

The sources declined to be named because details areconfidential. The Energy Department declined to comment on thedetails of the bidding process. Fisker and its restructuringfirm Kirkland & Ellis could not be immediately reached forcomment.

U.S. officials could select a winner as soon as next week. DOE and the winner will then pin down the final details of thenote sale. A public announcement may come later this month.

DOE extended a $529 million loan to Fisker in 2009 under aU.S. program to promote green vehicles. But after Fisker missedperformance targets, DOE froze its credit line in June 2011after Fisker drew down $192 million.

The Anaheim, California-based Fisker has been able to avoida Chapter 11 bankruptcy filing because investors are paying itsday-to-day expenses, people familiar with matter have previouslysaid.

Several top officials have left the company since April,including former Chief Executive Tony Posawatz and former ChiefFinancial Officer Jim Yost, sources said, adding that BarnyKoehler, one of Fisker's two founders, remains at the startup.

SHARP DECLINE IN FISKER VALUE

The $30 million minimum set by the DOE is a far cry fromFisker's estimated worth 18 months ago. In the spring of 2012,Fisker completed a fundraising round that valued the company at$2.2 billion, according to regulatory filings analyzed byventure capital data provider VC Experts.

But Fisker's worth fell sharply after the shaky launch inlate 2011 of its flagship model, the $100,000-plus Karma plug-inhybrid sports car, and the disclosure in early 2012 that DOE hadfrozen access to funding. Fisker's plans to build a secondmodel, the smaller Atlantic sedan, were then put on hold.

At least three groups have sought to buy Fisker this year,including German investment group Fritz Nols AG. Fritz Nols wasamong those who submitted a formal bid to buy the DOE loan thisweek, two of the sources said. The firm declined to comment.

A team that includes Chinese auto supplier Wanxiang Groupand former General Motors Co executive Bob Lutz alsosubmitted a bid this week, one person familiar with the mattersaid. Pin Ni, head of Wanxiang's U.S. division, declined tocomment. Lutz could not be reached for comment. This grouppreviously tried to buy the automaker for $20 million.

It was unclear how many others submitted formal bids.

Previously, another group led by Hong Kong billionaireRichard Li proposed buying Fisker's government loan for between$25 million and $30 million.

Buying the DOE loan would give the company a chance to mounta comeback under new ownership. But the new owner facesconsiderable start-up costs and potentially thorny negotiationswith creditors who are still owed millions.

Fisker owes suppliers about $80 million and owes a littleless than $10 million to Valmet Automotive, which built theKarma under contract in Finland, two of the sources said.

It could cost around $500 million to restart development ofthe Atlantic, although the final figure would depend on the newowner's strategy, sources said. Restarting Karma productionwould cost at least $50 million, they estimated.

The Atlantic was slated for production at Fisker'sstill-unfurnished factory in Delaware. The car, which was tohave a base price of $55,000, was intended to provide a base foradditional Fisker models.

View Comments