Posted on 02/21/2013 3:07:43 PM PST by jazusamo
Stimulus déjà vu-lishness lurks: Another green tech company that received hundreds of millions of taxpayer dollars is financially troubled, seeks a buyer (or their preferred term a partner), and China is ready to swoop in and buy up the remains on the cheap. And the same two Republican senators who slammed the last deal that went down like this are sickened again.
The first time this happened it was electric car battery maker A123 Systems that set up a deal to get $249 million (plus other multimillion dollar grants) from U.S. taxpayers, who thengot left holding the bag when executivesran the company into bankruptcy,made off with some sweet bonuses, andleft the techno-carcass for ChinasWanxiang Group to buy and learn about American battery innovation from.
The potential repeat scenario that appears to be playing out features Fisker Automotive, which once was A123s top customer and received $193 million from taxpayers to build an extended-range electric luxury car, the Karma. The U.S. Department of Energy halted payouts to Fisker under a $529 million loan guarantee it had granted due to the companys shortcomings in producing the $102,000 electric vehicle. A123 also had partial ownership of Fisker that contributed to its own losses, when the Massachusetts battery maker had totake an $11.6 million write-down of its stake in the 4 th quarter of 2011.
NLPC reported in December that Fisker had hired investment bank Evercore Partners, which according to the Wall Street Journal, often is hired to help companies through bankruptcy protection. Fisker officials said they enlisted the advisors to help them find a strategic partner or investors, and bristled (including a call from Henrik Fisker to NLPC) at the Journals suggestion that a bankruptcy option was internally discussed. Spokesman Roger Ormisher told Fortune that Fisker had hired Evercore to find a partner, and not to find a buyer.
Now the business news world is rife with reports that Fisker has offers under consideration for an ownership stake at least two of them, and maybe three, from Chinese companies, according to numerous media stories.
We can only confirm that the company has received detailed proposals from multiple parties in different continents, which are now being evaluated by the Company and its advisors, said a Fisker statement .
The favored bid, according to a Reuters report, is from Chinas Geely Holding Group, which bought Volvo from Ford Motor Company for $1.8 billion in 2010. The value of that offer is said to be between $200 million and $300 million.
Another which the Wall Street Journal says is the leader is said to come from Chinese state-owned company Dongfeng Motor Group, which seeks 80- to 85-percent ownership of Fisker for $350 million. And Wanxiang Group, the buyer of A123, is said to be involved.
Its in our interest if we can help Fisker, in any way we could, said Wanxiang America President Pin Ni to Bloomberg news at the end of January. Theyre a customer so it will be in our best interest to support them, as a vendor or possibly in a strategic alliance.
Reuters reported there is interest from South Korean and European companies as well, but the firm offers under consideration from the Chinese companies were said to be the result of an Asia trip by CEO Tony Posawatz (formerly in charge of the Chevy Volt for General Motors) and other top executives.
The prospect that U.S. taxpayer-supported technology and business stimulation would end up in the hands of its top economic rival was too much (again) for Republican Sens. Charles Grassley (Iowa) andJohn Thune (South Dakota) to remain silent. Both sharply criticized the Obama administration over its poor judgment, lack of oversight and seeming indifference towards A123s critical battery technology going to Wanxiang, and now are speaking up about the fate of Fisker.
Senator Thune and I asked the Energy Department about potential foreign ownership of Fisker in June 2012, Grassley said in a statement issued Tuesday. When we raised concerns about taxpayers supporting a company with foreign ownership, the Energy Department waved those concerns away. Now, those concerns may soon become a reality.
As for Thune, he said, Obamas green energy investments appear to be nothing more than venture capital for eventual Chinese acquisitions . After stimulus-funded A123 was just acquired by a Chinese-based company, its troubling to see that yet another struggling taxpayer-backed company might be purchased under duress by a Chinese company.
The comparatively low dollars being discussed in exchange for such a big chunk of ownership, if true, would make a lot of people involved with Fisker look even more foolish than they already do. For example, what happened to the already ( some say far) more than $1 billion in private equity the company says it raised? One reason for Fiskers cash problems may be as NLPC reported a year ago that the math indicates the $193 million taxpayer money broke down to about $250,000 in subsidies for each green Fisker job. Thats not very efficient.
Even the crony capitalism practices havent paid off very well. Silicon Valley investment firmKleiner, Perkins, Caufield and Byers, where former Vice President (and Karma owner) Al Gore is a partner, is heavily invested in Fisker, and executives with the firm have contributed more than $1 million over the last two decades to mostly Democratic candidates and causes. And Fiskers top private money raiser,Advanced Equities, Inc., was run out of business over ethical challenges.
As for the production of the vehicle itself, most of the assembly has been done in Finland, and the Karma has had heaps of problems since includingfires, recalls, anunfulfilled promise to build cars inDelaware, and anextremely bad review from Consumer Reports, among other things.
Among them all the Obama administration comes off looking the worst, with the decision to award millions of dollars to start-up companies like Fisker with unproven technologies and management.
Not that they ever cared. Whether its alternative energy schemes or electric vehicles, the president has often cited the need to invest taxpayer money in order to not lose out to China or India on the technological front, whether it made economic sense or not.
We used to have 2 percent of the market for advanced batteries that go into electric cars, he said in April 2011. We are going to have 40 percent in five years because of the investments we made with the Recovery Act.
It was all part of Obamas plan to put one million electric cars on the road by 2015. China must be saying if this is what U.S. competition is, then bring more of it on.
Paul Chesser is an associate fellow for the National Legal and Policy Center and publishes CarolinaPlottHound.com , an aggregator of North Carolina news.
Bold lettering mine.
Taxpayers building another company for China.
“when executivesran the company into bankruptcy,made off with some sweet bonuses, andleft the techno-carcass for ChinasWanxiang Group to buy and learn about American battery innovation from.”
The second mouse gets the cheese.
Amen to the both of you.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.