Sources familiar with the process have told Reuters that a group headed by Hong Kong heir and businessman Richard Li will likely emerge as the winner of the Department of Energy’s auction last week of Fisker Automotive’s $168 million debt to the DoE’s Alternative Technologies Vehicle Manufacturing loan program. Final details of the sale are being negotiated and the DoE had said before the auction that the results would not be made public until the deal is consummated. Fisker hasn’t built a car in over a year and it doesn’t have enough cash to pay current outstanding bills. Resolving the debt would be the first step to reviving Fisker.
The amount Li’s group bid was not revealed, though bidders had to be willing to pay at least $30 million just to participate in the sale. The Energy department required that all bidders had to have a plan to promote the development and production in the United States of environmentally sensitive cars.
In 2009, Fisker won a $529 million DOE loan guarantee under the ATVM program to supplement over a billion dollars in private equity financing. However, after failing to meet manufacturing benchmarks specified in the loan, following delays in producing the $100,000+ Karma extended range hybrid luxury sports sedan the DoE suspended the loan after Fisker had drawn down $192 million. Without additional funds, Fisker Automotive could not continue developing their more mass market Atlantic sedan.
Many Fisker executives, including company co-founder designer Henrik Fisker, left the company earlier this year and about three quarters of the company’s other employees have been laid off. Neither Fisker Automotive, Henrik Fisker nor the Pacific Century Group, the private investment group headed by Richard Li, have commented on the reported sale. Sources say that two other groups had submitted bids and were allowed to make counteroffers. The Department of Energy will publicly announce a winner after evaluating the bids based on the best interests of taxpayers.
No matter the final terms of the deal, the U.S. Treasury will likely lose tens of millions of dollars on the Fisker loan. “After exhausting any realistic possibility for a sale that might have protected our entire investment, the department announced today that we are auctioning the remainder of Fisker’s loan obligation, offering the best possible recovery for the taxpayer,” Peter Davidson, the director of the DoE’s loan program, said last month.
In September, the DoE sold off another company’s non-performing loan from ATVM, originally $50 million, for only $3 million, losing about $42 million. AM General bought that loan given to the Vehicle Product Group in suburban Detroit and acquired the rights to produce VPG’s MV-1 environmentally sensitive wheelchair accessible vehicle.