|Is Fisker Headed for a Solyndra-Like Collapse?|
|By MATTHEW MOSK (@mattmosk)||Apr 2, 2013, 9:31 AM|
As a major financial deadline looms, a green car company that was approved for a $529 million loan from the U.S. Energy Department is keeping quiet about whether it could be headed towards a Solyndra-like collapse, following reports the company may be preparing for bankruptcy.
"We are not offering any official comment on the speculation around bankruptcy at this stage," Roger Ormisher, a spokesperson for the electric car company Fisker Automotive, told ABC News recently.
Ormisher was responding to questions about reports last week that Fisker had hired a prominent law firm to advise it on possible bankruptcy proceedings. The Anaheim, Calif.-based company recently disclosed that it had furloughed non-essential U.S. workers in March, a move made as the company is "in the process of identifying a strategic partner... [but] continuing to manage its day-to-day operations," Ormisher said.
Fisker Automotive entered the electric car market with hefty support from the U.S. Energy Department and backing from such celebs as Justin Bieber and Leonardo DiCaprio, but the company and its high-priced Fisker Karma have continued to skid financially.
If the California-based luxury carmaker goes bust, it will be the most high profile failure of an alternative energy firm backed by the Obama administration since the solar company Solyndra filed for bankruptcy in 2011.
In April 2010, Fisker started receiving payments on a loan of up to $529 million from the Department of Energy as part of the Obama administration's push to bolster alternative energy firms. Fisker has been making repayments on the loan interest for several years, but the first sizeable repayment of the principle – an amount the company has not disclosed – is due at the end of April.
The loan to Fisker was part of a $1 billion bet the Energy Department made in two politically-connected California-based electric carmakers producing sporty -- and pricey -- cutting-edge autos. Fisker Automotive, backed by a powerhouse venture capital firm whose partners included former Vice President Al Gore, predicted it would eventually be churning out tens of thousands of electric sports sedans at the shuttered General Motors factory it bought in Delaware. The other major recipient of financial support, Tesla Motors, is backed by PayPal mogul Elon Musk.
Fisker launched the Karma with great fanfare, showing off prototypes of its sleek, quiet-running sports sedan at major auto shows and opening showrooms around the globe.
In October 2011, ABC News aired reports revealing that the government loan to Fisker raised concerns among industry observers and government auditors, and added to questions about the way billions of dollars in loans for smart cars and green energy companies were being awarded.
At the time, Fisker was already more than a year behind rolling out its $97,000 luxury vehicle bankrolled in part with DOE money. The ABC News investigation, conducted with the Center for Public Integrity, came in the wake of the administration's failed $535 million investment in Solyndra. That company's collapse, bankruptcy and raid by FBI agents generated further interest in how the Energy Department doles out billions in highly sought after green energy seed money.
Both Fisker and Obama administration officials raced to defend Fisker, but at the same time acknowledged the inherent risk involved in such start-ups. The Energy Department said it had carefully vetted loan recipients to minimize taxpayer risk.
Then in May 2012, after providing nearly $200 million in loans, the Energy Department announced it had frozen payments to Fisker, saying it hired a restructuring advisor to study the terms of the agreement and assess the performance of the company.
While Fisker did begin to ship Karmas to American customers and raise more than $1 billion in private financing, the company continued to be dogged by troubles.
The company faced unflattering reviews from some auto critics, questions about the risk of battery fires, and delays in the release of more affordable models utilizing the same hybrid-electric technology that went into the high end sports sedan. Ormisher told ABC News that less-pricey model – called the Fisker Atlantic – is 90 percent of the way through design and engineering phases, but there is not yet a completed prototype.
In a 2011 interview with ABC News, Henrik Fisker, the renowned Danish auto designer who founded the company, issued a promise to U.S. taxpayers that they had no reason to worry about the more than $500 million in federal funds the government was getting set to bet on the company. "No, I don't think they need to worry about it," Fisker said. When asked if Fisker might be the next Solyndra, he said, "Absolutely not."
When Henrik Fisker resigned from the company, the auto maker released a statement saying, in essence, that nothing had changed: "Mr. Fisker's departure is not expected to impact the company's pursuit of strategic partnerships and financing to support Fisker Automotive's continued progress as a pioneer of low-emission hybrid electric powertrain technology."
But the outlook has only appeared to get worse.
In December, the Wall Street Journal reported that Fisker board members had discussed the prospect of filing for bankruptcy, citing unnamed sources. Company executives responded by saying they were seeking larger partners for the small automaker.
For weeks following, there were widespread reports of a possible deal involving Chinese automakers. But a major Chinese manufacturer said those talks had fallen through. Last week came word in a report by Reuters that Fisker Automotive had begun consulting with bankruptcy lawyers. That news came with less than a month before Fisker must make a significant payment on its U.S. Energy Department loan, which comes due April 22.
Ormisher told ABC News the company is not prepared to publicly discuss the chances it could file for bankruptcy because it remains in talks with unnamed suitors to forge an automotive partnership that would enable the Fisker brand to continue. "That's really the company's focus," he said.