Automotive News said:LOS ANGELES (Reuters) -- Coda Holdings, the U.S. assembler of Chinese-made electric vehicles, filed for Chapter 11 bankruptcy protection today after selling just 100 of its all-electric sedans, another example of battery-powered vehicles' failure to break into the mass market.
The filing with U.S. Bankruptcy Court in Delaware will allow the Los Angeles company to exit the auto sector and refocus on energy storage, a far less capital-intensive business. The company uses the same technology it used in cars to build systems for utilities and building operators to store power.
A group of lenders led by Fortress Investment Group LLC plan to extend debtor-in-possession financing and will seek to acquire the company for $25 million through the bankruptcy process, Coda said in a statement.
Under Phil Murtaugh, former chief of General Motors' China unit, Coda launched its five-passenger electric car in California a year ago, delivering a range of 125 miles on a single charge. The $37,250 vehicle was criticized for its no-frills styling, and its short history also included a recall due to faulty airbags.
Just three years ago Coda was one of an emerging crop of California startups including Fisker Automotive and Tesla Motors Inc. seeking to build emission-free electric cars to appeal to mass-market consumers.
Investors poured money into the sector, and Coda raised $300 million in equity from backers including Aeris Capital, Limited Brands CEO Les Wexner, and former U.S. Treasury Secretary Henry Paulson. The company, however, in 2012 withdrew its request for $334 million in federal loans.
As the allure of EVs faded, Coda struggled to secure new private funding. Last year, Coda sought to raise $150 million but clinched just $22 million, according to a filing with the U.S. Securities and Exchange Commission.
Tesla has put thousands of cars on the road, but Fisker is considering a bankruptcy filing. Fisker's lithium-ion battery maker, A123 Systems Inc., filed for bankruptcy late last year.
Coda has about 40 active employees and expects to recall 50 furloughed workers. Emerald Capital Advisors is advising Coda on its restructuring, and Houlihan Lokey is its investment banker.
CODA said:CODA HOLDINGS, INC. TO RESTRUCTURE BUSINESS AROUND ENERGY STORAGE
May 1, 2013
LOS ANGELES, May 1, 2013 /PRNewswire/ -- CODA Holdings, Inc. ("the Company" or "CODA") announced today that it is focusing its business strategy on the growing energy storage market. CODA plans to implement the restructuring of its business through a voluntary filing under Chapter 11 of the U.S. Bankruptcy Code. The voluntary petition was filed today in the District of Delaware. This process is intended to enable the Company to complete a sale, confirm a Plan and emerge from bankruptcy in a stronger position to execute its new business plan. The Company expects the sale process to take 45 days to complete.
FCO MA CODA Holdings LLC, an affiliate of Fortress Investment Group, is leading a consortium of lenders intending to provide debtor-in-possession (DIP) financing to enable the Company's energy storage business to remain fully operational during the restructuring process. The Company has filed a motion with the bankruptcy court for approval of the consortium, or its designee, as the stalking horse bidder in the sale process to acquire the Company post-bankruptcy. In addition, the Company will seek to monetize value of its existing automotive business assets.
"After concluding a comprehensive review of our strategic options, the Board of Directors, management team and senior lending group have concluded that focusing on the Company's energy storage business presents the best opportunity moving forward," said Phil Murtaugh, Chief Executive Officer, CODA Holdings, Inc. "We believe the restructuring process that we have entered into today will enable the Company to complete a sale and confirm a Plan that maximizes the value of its assets, serving the best interests of our stakeholders."
CODA diversified its business and formed CODA Energy two years ago. CODA Energy's products are based on the same core technology, which includes its proprietary battery management and thermal management systems, found in CODA's vehicles adapted for stationary energy storage applications. The Company designs and builds scalable, custom energy storage solutions optimized for generation, distribution and behind-the-meter applications for commercial, residential and industrial end users. The Company is currently shipping product, and has a robust pipeline of new customers and existing installations in the field.
CODA's legal advisor in connection with the restructuring is White & Case LLP. Emerald Capital Advisors serves as its Chief Restructuring Officer and restructuring advisor, and Houlihan Lokey serves as its investment banker for the restructuring. Sidley Austin LLP is serving as FCO MA CODA Holdings LLC's legal advisor.