Battery Maker EnerDel/Ener1 Received $118M DOE Grant, Now Filing for Bankruptcy
January 27, 2012 10:01 AM
comment(s) - last by
Ener1's EnerDel subsidiary, which is wholly owned, won an $118.5 million grant in August 2009 from the U.S. Department of Energy to develop electric batteries
The Obama administration has had some horrible luck when it comes to dealing out energy loans. In 2011 alone, two energy companies filed for bankruptcy after receiving hefty sums from the government. Now, the administration can add a third strike to its list of bad deals.
Ener1 Inc., a company that provides efficient technology for the auto industry, filed for bankruptcy protection yesterday. The company's EnerDel subsidiary, which is wholly owned, won an $118.5 million grant in August 2009 from the U.S. Department of Energy to develop
for a Volvo electric vehicle and Think models. So far, EnerDel has spent $55 million of the $118.5 million.
"This was a difficult, but necessary, decision for our company," said Alex Sorokin, Ener1 CEO. "We are extremely pleased to have the strong support of our primary investors and lenders to substantially reduce the company's debt. Their support demonstrates that our business partners have an appreciation for our future business opportunities in proving energy storage solutions for electric grid, transportation and industrial applications. We expect the new funding to provide ample liquidity for our subsidiaries to meet their ongoing obligations to employees, customers and suppliers."
Ener1 is looking to jump on a restructuring plan that will provide $81 million to recapitalize the company and reduce its debt. Also, the company's existing common stock will be canceled, long-term debt holders will receive a new term loan, cash and new common stock in exchange for claims, new preferred stock will be given to the provider of the post-petition and exit funding, and Ener1's general creditors will be paid under the restructuring plan.
Vice President Joe Biden toured Ener1, located in Greenfield, Indiana, in January 2011. Biden believed the loan still seemed like a good move at the time, since Obama was pushing to
put 1 million electric vehicles on the road by 2015
and needed electric batteries to do so. But in June 2011, its largest customer, Think Global, which filed for bankruptcy, affected Ener1. It has since been a downhill battle for Ener1, which was delisted from NASDAQ in December 2011.
"The Department of Energy's grant to EnerDel is supporting a cutting edge battery manufacturing plant that is producing batteries in America that are being sold across the country and around the world," said Jen Stutsman, spokesperson for the Energy Department. "This grant is part of the department's efforts to commercialize promising vehicle technologies that will help America to reduce our dependence on foreign oil and ensure U.S. companies can compete in the global auto industry. While it's unfortunate that Ener1, the parent company, has entered a restructuring process, the new infusion of $80 million in private capital demonstrates that the technology has merit. As the company has said, the restructuring is not expected to impact EnerDel's operations and they do not expect to reduce employment at the site."
Despite the bankruptcy filing, the Department of Energy said the program is still moving forward and Ener1 will continue to operate normally. Employees are also expected to keep their jobs.
In addition to the $118.5 million grant from government, EnerDel also received $10 million in grants from the Bush administration and another $7.1 million in tax credits from Gov. Mitch Daniels (R-IN) to create the electric batteries.
Electric batteries for EVs have recently fallen under the spotlight due to General Motors' Chevrolet Volt, which had battery fire issues throughout 2011. Four different Volts participated in side-impact crash tests conducted by the National Highway Traffic Safety Administration (NHTSA), and three of them sparked or caught fire. This led to an investigation, which resulted in GM CEO Dan Akerson
being called to testify
in front of Congress this week. Thousands of
Volts were also recalled
to receive a steel piece that would better protect the lithium batteries.
Ener1's failure marks the third bad energy loan dealt by the Department of Energy. In September 2011, Silicon Valley-based solar panel company Solyndra filed for bankruptcy after receiving
a $535 million loan
from the DOE in 2009. Government officials reportedly warned the administration of the viability of Solyndra, saying the company would go bankrupt in a matter of two years. The warnings were put aside in order to meet political deadlines.
Later in November 2011, Beacon Power, a company that creates flywheels to store power and increase grid efficiency by preventing blackouts, filed for bankruptcy after receiving
a $43 million loan guarantee
from the Department of Energy in August 2010.
The Detroit News
This article is over a month old, voting and posting comments is disabled
RE: a worrying trend?
1/28/2012 9:58:47 AM
It happens a lot. Equity gets slammed in bankruptcies.
"Folks that want porn can buy an Android phone." -- Steve Jobs
GM CEO Called to Testify Before House Panel on Volt Fires
January 19, 2012, 9:50 PM
After Fire Issues, GM Prepares for Volt "Recall"
January 5, 2012, 11:26 PM
GM Buys Lithium Phosphate Batteries for Spark EV
December 9, 2011, 1:37 PM
DOE Deals Another Bad Energy Loan as Beacon Power Files for Bankruptcy
November 1, 2011, 10:03 AM
$500 Million Wasted on Bankrupt Solar Panel Company; White House was Warned
September 14, 2011, 4:22 PM
Star Wars Spinoff Film "Rogue One", Theme Park Attractions Announced
August 17, 2015, 12:20 PM
SpaceX Falcon 9's Seventh Supply Mission to ISS Ends w/ Fiery Stage 1 Explosion
June 28, 2015, 1:10 PM
Cool Science Video: Glowing Millipede Prowls the Nevada Desert
May 18, 2015, 12:00 PM
Newly Discovered Costa Rican Glass Frog is Kermit's Doppelgänger
April 22, 2015, 11:26 AM
Researchers Hope to Find "Exotic" Lifeforms Inside Crater of Dinosaur Killing Meteor
April 14, 2015, 8:47 PM
Mathematician's Sociological Formulation May Explain the "Hipster Paradox"
April 14, 2015, 1:13 PM
Most Popular Articles
Why the U.S. Won't be Able to Ban Google's New Huawei Marshmallow Flagship Phone
October 3, 2015, 5:27 PM
Apple's First Fixes to iOS 9 Land w/ iOS 9.0.1 Release
September 23, 2015, 6:11 PM
Apple Watch Commands 2 in 3 Smart Watch Sales, WatchOS 2 Sweetens the Pitch
September 20, 2015, 6:07 PM
Tag Heuer Admits Its $1,800 Smartwatch Was Inspired By Apple -- Price-Wise
September 30, 2015, 6:32 PM
Breaking Bad: How to Crash Google's Chrome Browser With Just 8 Characters
September 23, 2015, 11:08 AM
Latest Blog Posts
Sceptre Airs 27", 120 Hz. 1080p Monitor/HDTV w/ 5 ms Response Time for $220
Dec 3, 2014, 10:32 PM
Costco Gives Employees Thanksgiving Off; Wal-Mart Leads "Black Thursday" Charge
Oct 29, 2014, 9:57 PM
"Bear Selfies" Fad Could Turn Deadly, Warn Nevada Wildlife Officials
Oct 28, 2014, 12:00 PM
The Surface Mini That Was Never Released Gets "Hands On" Treatment
Sep 26, 2014, 8:22 AM
ISIS Imposes Ban on Teaching Evolution in Iraq
Sep 17, 2014, 5:22 PM
More Blog Posts
Copyright 2015 DailyTech LLC. -
Terms, Conditions & Privacy Information