DETROIT The U.S. Department of Energy will put up for auction this week a $50 million loan awarded to the now-closed Vehicle Production Group LLC, an unusual move by the DOE that may give U.S. taxpayers a chance to recoup a portion of their investment.
The auction may also mark a path for the government to offload non-performing loans made to other troubled, taxpayer-backed companies, including hybrid sports car maker Fisker Automotive, which owes the DOE $192 million and has so far failed to secure a buyer.
The auction will be held on Thursday, according to a auction notice posted on govsales.gov, which tracks government asset sales. (here)
A DOE spokeswoman did not respond to requests for comment.
VPG, a maker of wheelchair-accessible vans that run on compressed natural gas, shut down in May after running out of cash. The DOE and VPG have been in talks with potential buyers for the company.
VPG is "in the process of being purchased and should be back in production soon," John Walsh, VPG's former chief executive officer, said in an email late on Tuesday.
VPG and Fisker were awarded $50 million and $529 million respectively under the Advanced Technology Vehicles Manufacturing loan program that also provided funds to Ford Motor Co, Nissan Motor Co and Tesla Motors Inc.
But VPG and Fisker struggled to meet the performance targets laid out in their loan agreements. VPG stopped operations after the DOE froze its assets.
"The loan is presently not performing," the DOE said of the VPG loan in its auction notice.
The buyer of the loan could press VPG's owners for repayment or exchange it for equity in the business if the company resumes trading.
In May, some Fisker investors proposed to buy the DOE loan at a discount in hopes of salvaging the company. This prompted the DOE to examine the legal ramifications of a loan sale.
VPG will still face an uphill battle to resume production although its focus on natural gas may be attractive to some buyers, analysts said.
Fisker, which has not built a car in more than a year, is a more severe challenge.
"I just don't see a great argument for making the bid and resurrecting either of them," said Brett Smith, industry analyst with the Center for Automotive Research. "It's so tough to be a niche manufacturer like that in this world."
Fisker declined to comment.
(Additional reporting by David Ingram in Washington; Editing by Eric Meijer)