NEW YORK, NY--(Marketwired - Apr 23, 2013) - Fisker "missed" its first interest payment to the Department of Energy - the company did not have sufficient cash left in its bank account to make the $20.2 million loan payment (determined by PrivCo through calculations based on the loan drawdown schedule and analysis of loan documentation) by April 22nd, 2013 at 1pm ET. However, as a precise legal matter, Fisker's payment was in fact on time, and there was no payment default through the following "loophole" consented to by the DOE in order to avoid a formal and public payment default, just 2 days before a Congressional House Oversight Committee Hearing scheduled for April 24 at 2pm ET. The hearing will call into question the DOE's "Bad Bet on Fisker" and potentially negligent underwriting of the $528.7M credit facility, ultimately raising the question of whether the DOE ignored multiple events of default or issued written amendments and waivers to the original loan agreements while failing to inform the public.
Monday's delay of an inevitable formal declaration of default and very likely politicized Fisker bankruptcy, ignores the truth that $1.1 billion in equity raised by Fisker from prominent venture capital firms, over 1,200 individual investors, and others is likely to be worthless due to the seniority of DOE's $193M Loan and an additional $12.5 million loan made by the State of Delaware. Regardless of the consequences to recent Fisker equity investors, ongoing vendors to Fisker, and other unsecured creditors, the D.O.E. has delayed foreclosing on its $192 Million loan despite multiple events of default by Fisker. It is clear from PrivCo's analysis of over 11,000 pages of never before published original documents, the D.O.E.'s actions to date have not been those of a rational lender.
The DOE's decisions will ultimately:
(1) Significantly reduce the last remaining Collateral of any value protecting the $192M in taxpayer money borrowed by now insolvent Fisker,
(2) Provide Fisker 3 more months before its next scheduled $13.5 million loan payment is due to the D.O.E. on July 22, 2013,
(3) Delay a formal and public Payment Default or foreclosure by the DOE and a Chapter 11 bankruptcy filing two days before a House Oversight Committee Hearing whose witnesses (including the head of the DOE's Loan Program, resigned Fisker Automotive Founder & CEO Henrik Fisker, and current Fisker Automotive CEO Tony Posawatz) will provide sworn testimony on whether the Fisker loan is "in Default."
PrivCo CEO and Corporate Lawyer Sam Hamadeh, Esq., stated, "The release of restricted cash collateral with the purpose of assisting the insolvent borrower to technically make its scheduled Loan Payment is highly irregular. Such an action would never be taken by a rational Lender acting in its own financial interest. It would be akin to a landlord allowing their tenant to use a security deposit to pay rent they do not have the money for."
PrivCo is the leading provider of private company financial data and independent research on over 207,000 private companies and 78,000 private company deal details, including private company mergers & acquisitions, private equity, venture capitals, LBOs, and IPOs.
Topics: Fisker, Automotive, Bankruptcy, D.O.E.