DETROIT/LONDON Oct 10 The U.S. Department of
Energy will consider bids to purchase Fisker Automotive's
government loan on Friday in what could be the start of a
lengthy and expensive process to revive the dormant green-car
Fisker, which has not built a car in about 15 months, does
not have enough money to pay millions in outstanding bills. The
company laid off most of its employees in April after running
short of cash, a month after co-founder and executive chairman
Henrik Fisker resigned.
The Department of Energy (DOE) said last month that it
planned the auction after "exhausting any realistic possibility"
that it could recoup the entire $168 million still owed by
Bids to buy Fisker's DOE loan were due Oct. 7 and an auction
is still planned for Friday, despite a U.S. government shutdown
that began 10 days ago.
Prospective bidders had to offer at least $30 million to
qualify, with 10 percent down due with the bid, two people with
knowledge of the process said on Thursday.
But restarting the company will cost considerably more. A
reinstatement of Fisker's original plan to build several models
could cost up to half a billion dollars, according to people
familiar with the company's finances.
The sources declined to be named because details are
confidential. The Energy Department declined to comment on the
details of the bidding process. Fisker and its restructuring
firm Kirkland & Ellis could not be immediately reached for
U.S. officials could select a winner as soon as next week.
DOE and the winner will then pin down the final details of the
note sale. A public announcement may come later this month.
DOE extended a $529 million loan to Fisker in 2009 under a
U.S. program to promote green vehicles. But after Fisker missed
performance targets, DOE froze its credit line in June 2011
after Fisker drew down $192 million.
The Anaheim, California-based Fisker has been able to avoid
a Chapter 11 bankruptcy filing because investors are paying its
day-to-day expenses, people familiar with matter have previously
Several top officials have left the company since April,
including former Chief Executive Tony Posawatz and former Chief
Financial Officer Jim Yost, sources said, adding that Barny
Koehler, 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 from
Fisker'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 by
venture capital data provider VC Experts.
But Fisker's worth fell sharply after the shaky launch in
late 2011 of its flagship model, the $100,000-plus Karma plug-in
hybrid sports car, and the disclosure in early 2012 that DOE had
frozen access to funding. Fisker's plans to build a second
model, 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 was
among those who submitted a formal bid to buy the DOE loan this
week, two of the sources said. The firm declined to comment.
A team that includes Chinese auto supplier Wanxiang Group
and former General Motors Co executive Bob Lutz also
submitted a bid this week, one person familiar with the matter
said. Pin Ni, head of Wanxiang's U.S. division, declined to
comment. Lutz could not be reached for comment. This group
previously tried to buy the automaker for $20 million.
It was unclear how many others submitted formal bids.
Previously, another group led by Hong Kong billionaire
Richard 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 mount
a comeback under new ownership. But the new owner faces
considerable start-up costs and potentially thorny negotiations
with creditors who are still owed millions.
Fisker owes suppliers about $80 million and owes a little
less than $10 million to Valmet Automotive, which built the
Karma under contract in Finland, two of the sources said.
It could cost around $500 million to restart development of
the Atlantic, although the final figure would depend on the new
owner's strategy, sources said. Restarting Karma production
would cost at least $50 million, they estimated.
The Atlantic was slated for production at Fisker's
still-unfurnished factory in Delaware. The car, which was to
have a base price of $55,000, was intended to provide a base for
additional Fisker models.