(Reuters) - The U.S. Department of Energy took $21 million from cash-strapped Fisker Automotive on April 11 that will go toward repaying nearly $200 million in loans extended to the automaker under a U.S. program to spur advanced vehicle development.
“The department recouped the company’s approximately $21 million reserve account -- funds that came from the company’s sales and investors, not our loan- and will apply those funds to the loan,” DOE spokeswoman Aoife McCarthy said on Monday.
Fisker, maker of the $100,000-plus Karma plug-in hybrid sports car, owes the U.S. government about $192 million that was part of a $529 million loan that the automaker won in 2009 under the Advanced Technology Vehicles Manufacturing program.
Fisker was expected to make the first payment on that loan on Monday, but a DOE official speaking on the condition of anonymity said Fisker missed the deadline.
A Fisker spokesman was not immediately available to comment on the DOE’s announcement on Monday. Two sources said Monday’s payment amounted to $10 million. Neither the DOE nor Fisker has confirmed that figure.
Before the DOE swept its account, Fisker had less than $30 million in cash on hand and was struggling to conserve enough cash to avoid breaching a covenant in its pact with the DOE, sources familiar with the company previously said.
Fisker’s cash crunch has forced the company to take a series of steps to stay afloat including overhaul its management and search for a buyer in China. The company also hired law firm Kirkland & Ellis to prepare a possible bankruptcy filing.
Earlier this month, Fisker fired three-quarters of its staff earlier this month to conserve cash.
The announcement comes two days before the House Oversight and Government Reform Committee holds a hearing on the DOE’s decision to award a loan to the automaker.
Henrik Fisker, who helped found the company and abruptly resigned from Fisker last month, will testify at the April 24 hearing titled “Green Energy Oversight: Examining the Department of Energy’s Bad Bet on Fisker Automotive.” Co-founder Bernhard Koehler will also give testimony.
In mid-2011, the DOE quietly froze Fisker’s loan after the company fell short of several financial and sales targets.
“Using the safeguards we write into our loan agreements, the Department stopped disbursing on the loan in June 2011 after the company fell short of the aggressive milestones that we had established as a condition of the loan,” McCarthy added.
Fisker has said in the past that it is seeking a strategic alliance or partnership. Investors and company executives are scrambling to search for sources of capital to pay for Fisker’s turnaround, but no such deals have transpired.
In the past, Fisker has held talks with more than half a dozen automakers, including Geely, the owner of Sweden’s Volvo; state-owned Dongfeng Motor Group Co (0489.HK) and Fiat SpA.
But none of the prospective buyers has been willing to assume the terms of the DOE loans.
Reporting by Deepa Seetharaman; Editing by Phil Berlowitz and Bob Burgdorfer