Delaware’s hope for Fisker rests with Chinese billionaire
As Fisker Automotive speeds toward a bankruptcy deal, the future of whether the Karma, Fisker’s luxury hybrid sports car, will ever be produced in Delaware remains uncertain.
However, a glimmer of hope remains in a recent deal between the U.S. Department of Energy and Hybrid Technology LLC.
Hybrid Tech recently purchased Fisker’s federal debt, after the Dept. of Energy held an auction to help recoup some of the $192 million it loaned to Fisker as part of its Advanced Technology Vehicles Manufacturing Loan Program.
The loan program promotes manufacturing and production of advanced technology vehicles in the United States. Therefore, the winning bidder of the loan auction had to commit to “ensure the implementation of a business plan that includes moving the manufacturing of the Karma to the U.S. and commits to keeping the related engineering and design capacity in California,” according to the Department of Energy.
Following the federal loan purchase, Hybrid Tech released a statement saying it plans to restart production of the Karma as well as future hybrid vehicles.
“HT is committed to building upon the Fisker legacy and presence in the United States as a foundation for the design and manufacture of advanced hybrid electric vehicles,” said Caroline Langdale, spokesperson for Hybrid Tech. “We will work to realize the full potential these fantastic cars offer in helping to remake the auto industry for the 21st Century.”
While Fisker’s engineering hub is in California, the company does not have a manufacturing facility in the U.S. Fisker had been producing the vehicles in Finland with plans to manufacture in Delaware before it went bankrupt.
As part of the bankruptcy deal, Hybrid Tech could acquire Fisker’s Boxwood facility located in Newport, Delaware. The 3.5 million square foot building is a former General Motors plant and was acquired by Fisker in 2009 specifically to manufacturer the Karma.
The state of Delaware committed more than $20 million to help bring Fisker to Delaware. In 2009 Henrik Fisker was on stand with Delaware leaders and Vice President Joe Biden to rollout the grand plan in Delaware which included creating thousands of manufacturing jobs.
As part of the incentives package, the state had been on the hook for the utility payments at the facility. The state has since ceased payments of the utilities.
At the last bankruptcy hearing, U.S. Bankruptcy Court Judge Kevin Gross ordered the utilities to remain on at the facility in order to preserve the building as an asset. Fisker is required to pay those costs.
Alan Levin, director of the Delaware Department of Economic Development Office said it’s too early to tell if Hybrid Tech is planning anything for Delaware.
“It does not give a clue as to Hybrid’s intention,” said Levin. “The preservation of the valuable building asset is the prudent thing to do.”
He also said Hybrid Tech has not reached out to his department.
The company has the option of excluding the Boxwood plant from the bankruptcy deal all together which would allow Fisker to liquidate that facility to pay creditors.
Who is Hybrid Tech?
Little is known about Hybrid Technology LLC, the company on pace to take over Fisker.
Hybrid Tech was established just two months ago according to the Delaware Division of Corporations. No website, phone number or office address is listed for the company.
Hong Kong businessman and billionaire Richard Li is reportedly the owner of Hybrid Tech and is listed in the bankruptcy documents as a buyer.
The company is prepared to put up $75 million in the form of a credit bid on the secured loan for Fisker’s assets. They’ve also agreed to put up as much as $8 million in Debtor in Possession (DIP) money to assist Fisker in the bankruptcy process.
Creditors Line Up
Delaware is among the thousands of creditors owed money by Fisker. Levin said there’s a chance the state could recoup some of the investment but it’s too early to tell how much.
At one point, Fisker had secured more than half a billion dollars in federal loans and upward of a billion dollars in private investments including those who made investments in the company as well as those who put down a deposit for a vehicle.
A few noteworthy creditors include BMW, Al Gore, Cisco CEO John Chambers, NRG CEO David Crane, actor Leonardo DiCaprio, tennis pro Andre Agassi, Bloom Energy CEO KR Srider and Robert Hunter Biden, the son of Vice President Joe Biden and brother of Delaware Attorney General, Beau Biden.
In addition to bankruptcy, the company is also facing a class action lawsuit filed by former Fisker employees who were laid off earlier this year.
Fisker blames the bankruptcy on a number of issues including supply chain disruptions, design delays and the inability to access additional or incremental liquidity. They also claim sales were affected by negative press after the company was forced to recall car batteries after cars began catching on fire.
Fisker also claims to have suffered a multimillion dollar loss when 339 Karmas were destroyed in Hurricane Sandy.
The next bankruptcy court hearing is scheduled for January 3 at which time Judge Gross will decide whether to approve the sale between Fisker and Hybrid Tech. Creditors also have the option of voting for or against the bankruptcy plan. They have until Dec. 30 to cast their ballots.
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