UPDATE 1-China carmaker Dongfeng drops bid for Fisker stake -sources

Thu Mar 28, 2013 4:37am EDT

By Norihiko Shirouzu and Deepa Seetharaman

BEIJING/DETROIT, March 28 (Reuters) - Chinese state-owned carmaker Dongfeng Motor Group will not pursue a bid for a majority stake in Fisker Automotive, according to sources familiar with the matter, leaving the troubled U.S. electric car without a clear financial backer.

Dongfeng was put off by Fisker's loan obligations to the U.S. government which include restoring capacity and jobs at the firm's Delaware plant, said the sources who declined to be named due to the confidential nature of the matter.

These conditions, which also deterred Chinese automaker Zhejiang Geely Holding Group from bidding for the U.S. company, make it impossible for Dongfeng to move the production of Fisker's products to China, the sources added.

"In the end, what mattered to Dongfeng was being able to produce Fisker cars in China," said one of the sources. "It became apparent over time that could not have been done with this deal."

Fisker spokesman Roger Ormisher declined to comment. A Dongfeng spokesman did not immediately respond to an emailed request for comment.

Fisker, the maker of the $100,000-plus Karma plug-in hybrid, has not produced a car since July and is seeking a financial backer to help finish the development of a second plug-in hybrid, the Atlantic, and produce it at the Delaware plant.

Fisker employees are on a furlough this week to help the company conserve cash.

The sources said Fisker was open to selling off pieces of the company, including intellectual property rights for its plug-in electric hybrid technology. Chief Executive Tony Posawatz also visited China this week to try and patch things up with Dongfeng and other suitors, the sources added.

One of the sources said Fisker was trying to get a bridge loan in the United States to buy time to find a suitor.

Geely dropped its bid for a stake in Fisker due to the obligations the U.S. Department of Energy had placed on the firm to grant it a $529 million loan, sources had told Reuters earlier this month.

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