I have it on very good authority that Richard Li and his group was awarded the loan. What that means for the future of Fisker is still up in the air. A car company? A powertrain company? Something else entirely? Hopefully some answers come sooner rather than later.
Richard Li wins...at least that's the rumor
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If that's true then Henrik would be back?
Interesting. Though, I do not think they'd have much of a chance as a powertrain company.
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Interesting, as this would be an outcome that would more likely see something similar to the original business plan pursued. Richard Li was a C-D round investor with a belief in the Karma and the range-extended EV concept, both for US needs and for application in the rest of the world.
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If true, this is as good as it gets.
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Not necessarily. Richard Li was on the Board when they removed Henrik from his position as CEO.
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The Wanxiang plan would have put Fisker into pre-packaged bankruptcy even though the total value may have been more to the DOE (rumor). Looks like something may have been learned from the A123 fiasco.
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The new management may very well want to hire Henrik as a consultant or other outside capacity to help with design. I don't think anyone in their right mind would let him near a corporate checkbook ever again.
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OMG this is killing me.
I know, I know, most of you guys have been through this a bazzilion times before, but this is painful. I was realy rooting for Ingo - jobs at home and owner/ lover and all. I thought I saw something about Li pairing up with Henrik, but isn't that for purely financial purposes? They would just hi-tail it back to China for the tech??? China + business = bad IMO
Ugh - I don't even know what to think.
I know, I know, most of you guys have been through this a bazzilion times before, but this is painful. I was realy rooting for Ingo - jobs at home and owner/ lover and all. I thought I saw something about Li pairing up with Henrik, but isn't that for purely financial purposes? They would just hi-tail it back to China for the tech??? China + business = bad IMO
Ugh - I don't even know what to think.
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Good time to revisit past coverage of the Richard Li bid. The only credible reporting is from Reuters (everything else is re-reporting), and this story is from June, around the time my sources indicate the offer was first made to Evercore:
Story link: http://www.reuters.com/article/2013/06/17/us-autos-fisker-china-idUSBRE95G03420130617
FINAL STAGES
On March 13, Henrik Fisker resigned from the company, citing major disagreements with other executives and board members. By the end of March, it was clear that neither Chinese company would bid. Within weeks, Fisker fired 75 percent of its U.S. workforce in a last-ditch effort to save cash.
The Chinese government told state-owned Dongfeng not to go alone on the deal, according to a source close to Dongfeng. It also preferred Dongfeng bid jointly with Geely, this person said.
The Chinese government also wanted production of Fisker cars moved to China, but concluded that wouldn't be possible because of the terms of Fisker's U.S. Department of Energy loan. The restrictive terms of the DOE loan and the amount of work needed to overhaul the Delaware plant also helped convince Geely not to submit a final offer.
People close to Fisker worry the company is about to repeat the same errors. Investors, led by Hong Kong billionaire Richard Li, are looking to buy out the DOE's loan for pennies on the dollar. The unusual strategy would allow Fisker to avoid bankruptcy, an outcome favored by other investors.
As a result, Fisker has still not acted on a competing offer from Chinese auto parts supplier Wanxiang and VL Automotive, a joint venture between former General Motors executive Bob Lutz and Michigan industrialist Gilbert Villarreal.
Now I have NO idea how ANY suitor or buyer avoids bankruptcy, what with so many people owed so much money, but if it WERE possible to avoid bankruptcy that would obviously be great news for karma owners with warranties.
Story link: http://www.reuters.com/article/2013/06/17/us-autos-fisker-china-idUSBRE95G03420130617
FINAL STAGES
On March 13, Henrik Fisker resigned from the company, citing major disagreements with other executives and board members. By the end of March, it was clear that neither Chinese company would bid. Within weeks, Fisker fired 75 percent of its U.S. workforce in a last-ditch effort to save cash.
The Chinese government told state-owned Dongfeng not to go alone on the deal, according to a source close to Dongfeng. It also preferred Dongfeng bid jointly with Geely, this person said.
The Chinese government also wanted production of Fisker cars moved to China, but concluded that wouldn't be possible because of the terms of Fisker's U.S. Department of Energy loan. The restrictive terms of the DOE loan and the amount of work needed to overhaul the Delaware plant also helped convince Geely not to submit a final offer.
People close to Fisker worry the company is about to repeat the same errors. Investors, led by Hong Kong billionaire Richard Li, are looking to buy out the DOE's loan for pennies on the dollar. The unusual strategy would allow Fisker to avoid bankruptcy, an outcome favored by other investors.
As a result, Fisker has still not acted on a competing offer from Chinese auto parts supplier Wanxiang and VL Automotive, a joint venture between former General Motors executive Bob Lutz and Michigan industrialist Gilbert Villarreal.
Now I have NO idea how ANY suitor or buyer avoids bankruptcy, what with so many people owed so much money, but if it WERE possible to avoid bankruptcy that would obviously be great news for karma owners with warranties.
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Here's another earlier story from May (by Deepa Seetharaman, who has really done the best job of covering Fisker):
BUYING OUT THE DOE
Henrik Fisker founded the company with Barny Koehler in 2007 and together they raised about $1.2 billion in private funds. In 2009, Fisker won a $529 million DOE loan in 2009 as part of a U.S. government program to promote advanced vehicles.
Fisker got $192 million in funds before the DOE froze Fisker's credit line in mid-2011 after Fisker missed key performance targets. The resulting cash crunch prompted Fisker to overhaul its management team and look for buyers.
The terms of the loan have been a source of friction between the DOE and Fisker. Prospective buyers have been unwilling to assume the obligations spelled out in the loans, sources close to the company have previously said.
Last year, Fisker tried to refinance the federal loans through a bond offering that did not gain traction, according to sources and internal DOE documents released last month during the congressional hearing. In April, the DOE seized $21 million from Fisker's coffers to repay a portion of the loan.
Investors from Europe are working with Hong Kong businessman Li, who is chairman and chief executive of the Pacific Century Group, to buy out the DOE's position in Fisker, most likely at a discount, sources said on Tuesday.
This measure would allow Fisker to wrest free of the loan's current obligations and allow the DOE to recover more than they might get in a bankruptcy. But this route may open the DOE to criticism and raises questions about Fisker's future strategy.
"That's not that uncommon in the financial circles," Vickrey said. "If you can settle that debt at discount and sell the assets to another automaker, it might make sense as an investment.
(Vickrey is an Analyst at Gradient analytics).
So again this story suggests avoiding bankruptcy on the one hand, but on the other hand it suggests a sale of assets, and what are those exactly? There is rumored to be a Valhalla inventory of cars in Europe (at a generous $50K wholesale each that could amount to of $10M), parts in Finland (value negligible, except to owners), and "intellectual property" (valuation = eye of the beholder, but probably also negligible).
Still though, no bankruptcy means there should still be a warranty, but I think owners will need to fight to have a set-aside from any sale proceeds to satisfy future claims.
BUYING OUT THE DOE
Henrik Fisker founded the company with Barny Koehler in 2007 and together they raised about $1.2 billion in private funds. In 2009, Fisker won a $529 million DOE loan in 2009 as part of a U.S. government program to promote advanced vehicles.
Fisker got $192 million in funds before the DOE froze Fisker's credit line in mid-2011 after Fisker missed key performance targets. The resulting cash crunch prompted Fisker to overhaul its management team and look for buyers.
The terms of the loan have been a source of friction between the DOE and Fisker. Prospective buyers have been unwilling to assume the obligations spelled out in the loans, sources close to the company have previously said.
Last year, Fisker tried to refinance the federal loans through a bond offering that did not gain traction, according to sources and internal DOE documents released last month during the congressional hearing. In April, the DOE seized $21 million from Fisker's coffers to repay a portion of the loan.
Investors from Europe are working with Hong Kong businessman Li, who is chairman and chief executive of the Pacific Century Group, to buy out the DOE's position in Fisker, most likely at a discount, sources said on Tuesday.
This measure would allow Fisker to wrest free of the loan's current obligations and allow the DOE to recover more than they might get in a bankruptcy. But this route may open the DOE to criticism and raises questions about Fisker's future strategy.
"That's not that uncommon in the financial circles," Vickrey said. "If you can settle that debt at discount and sell the assets to another automaker, it might make sense as an investment.
(Vickrey is an Analyst at Gradient analytics).
So again this story suggests avoiding bankruptcy on the one hand, but on the other hand it suggests a sale of assets, and what are those exactly? There is rumored to be a Valhalla inventory of cars in Europe (at a generous $50K wholesale each that could amount to of $10M), parts in Finland (value negligible, except to owners), and "intellectual property" (valuation = eye of the beholder, but probably also negligible).
Still though, no bankruptcy means there should still be a warranty, but I think owners will need to fight to have a set-aside from any sale proceeds to satisfy future claims.
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I don't know if this is true, but someone told me that Richard Li's strategy was to put the company into bankruptcy AFTER buying out the DOE loan. This would put him in the position of being the largest secured creditor and therefore in the driver's seat for the restructuring under BK.
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Aren't we forgetting that Richard Li is a billionaire. It doesn't add up for me for him to go into this just to make a few millions and deal with all the headaches and potential lawsuits. It seems to me that it would be a novel idea for a billionaire to own a car company, especially if you can get it on the cheap.
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@Roberta, I remember reading somewhere that in order to qualify to bid for the DOE auction, the potential buyer had to submit a business plan that included a path to manufacturing in the US. Regardless of where the Karma is assembled, something like 60% of the components, particularly the major items like batteries, motor, and software, and all built in the US and the US is a very large market for this car, so chances are it is going to be built either in the US, or nearby in Canada or Mexico.
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A few millions are a few millions, even to a billionaire. Also, having a very rich guy start and successfully run a car company is not unheard of.
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Dennis, I think that was before the DOE announced that it will be auctioning the loan off. Assuming this is true, and Li's consortium has won the bid, there will be no reason to go to the expense of a chapter 11 bankruptcy, IMHO. It will be lot cheaper and quicker to just negotiate with the creditors and move forward, I mean Onward.
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I'm not sure I agree with that. If they don't go through BK, doesn't FA have warranty obligations to 2500 owners plus 50 dealers who haven't been reimbursed for warranty work performed? How would they go about negotiating with those creditors? And if they don't plan to assemble more Karma's in Finland, what would be Valmet's incentive to negotiate? IMO BK would be much cleaner and cheaper because they can dispense with more obligations, like A123 did with the FA warranty claims.
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