Two U.S. Senators Worry Fisker Could be Sold to Chinese Firm
February 21, 2013 11:49 AM
comment(s) - last by
They don't want the automaker to end up like A123 Systems
After bankrupt battery company
A123 Systems was (mostly) acquired by a Chinese company
, two U.S. senators now worry that automaker Fisker Automotive will have the same fate.
Sens. Chuck Grassley (R-Iowa) and John Thune (R-South Dakota) have expressed concern that taxpayer dollars will support a company with foreign ownership if Fisker is acquired by a Chinese company.
"Senator Thune and I asked the Energy Department about potential foreign ownership of Fisker in June 2012. When we raised concerns about taxpayers supporting a company with foreign ownership, the Energy Department waved those concerns away," Grassley said. "Now, those concerns may soon become a reality. Like A123, this looks like another example of taxpayer dollars going to a failed experiment. Technology developed with American taxpayer subsidies should not be sold off to China. I hope there's at least some accountability at the Department of Energy, but given its track record, I'm not holding my breath."
It has been strongly suggested that two Chinese companies -- Geely Automotive and Dongfeng Motor Corp. -- are looking for a majority stake in Fisker. It has also been rumored that Fisker could move all of its auto production to China if it made a deal with a Chinese company.
A deal isn't expected to be made until next month at the earliest. Fisker made mention that it is considering offers from all over the world -- not just China.
received $529 million in U.S. Department of Energy (DOE) loans in April 2010. The loans were part of a program to progress development of high-tech vehicles, where Fisker received $169 million for Karma plug-in engineering and $359 million for Nina production. The loans were also meant to revamp a closed General Motors plant in Wilmington, Delaware for Fisker EV production.
However, Fisker fell a little behind on its production schedule, and in May 2011,
DOE froze the loans due to "unmet milestones."
Fisker had only drawn $193 million of it at that point.
In October 2012,
the House Oversight and Government Reform Committee
decided to look into
the original terms of
its loan to Fisker Automotive
, questioning whether DOE will step in to help the electric vehicle (EV) automaker if it goes bankrupt and investors are allowed to retrieve their money.
In December 2012, Fisker's battery maker A123 Systems was
Chinese firm Wanxiang Group
about $260 million. A123
filed for bankruptcy
in October 2012.
Earlier this month, Fisker said it hoped to
restart production of its Karma plug-in
"fairly soon" as it waits for
A123 to come out of this bankruptcy situation.
The Detroit News
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RE: Clause left out?
2/21/2013 1:47:24 PM
As stated by BifurcatedBoat, if you're going to take a U.S. Government guaranteed loan, you have removed yourself from a true "free market" economy.
Reality isn't too hard for me. I actually (well, I didn't do it alone, I just led the team) structured -- and received authorization for -- one of these loans for a company I was with well over a dozen years ago and for more than three times at what Fiskar's loan is capped -- and it wasn't through DOE (though they were involved from the outside).
These loans require specific legal authorizations, involvement of several different agencies and even OMB and CBO. In most cases people don't even think about the possibility of the company involved being taken out of the U.S. In some cases, something which I disagree with completely, the loan is to a non U.S. organization in the first place (in the 70s and 80s several of these loans were to non U.S. organizations).
However, if the loan is to a U.S. Company organizations like the OMB and CBO take into account the nature of the company when setting the interest rates (which are negotiable) and the fees (some of which are negotiable) -- and the calculation of risk versus potential benefit associated with the loan which goes into the interest and fee determinations.
If the company later becomes a foreign owned company and possibly will move production out of the U.S. this radically changes the risk versus benefit equation after the loan is issued/authorized. There needs to be something to re-balance the equation OR not allow the underlying situation to change while the loan is in effect.
RE: Clause left out?
2/21/2013 1:59:14 PM
How dare you think with your own brain?!?! STOP! :)
RE: Clause left out?
2/22/2013 7:55:43 AM
Agreed. The government shouldn't even be giving out this money to begin with since it has no authority to play venture capitalist. But since it's going to, it should put strict restrictions around what happens when the company changes ownership, especially to entities in foreign nations. But we know these loans are more about pushing an agenda, not reasoned thinking or whether or not a company is actually viable or not.
RE: Clause left out?
2/22/2013 10:20:23 AM
So which would you prefer?
A123 being sold off only to US buyers, resulting in the gov't loan not being paid off?
Or would you rather have the Chinese buy it, reimbursing the taxpayer with interest?
And don't cop out with a suggestion of no loans in the first place. That would mean no US manufacturing attempts at all and just basing in China from the beginning.
"A politician stumbles over himself... Then they pick it out. They edit it. He runs the clip, and then he makes a funny face, and the whole audience has a Pavlovian response." -- Joe Scarborough on John Stewart over Jim Cramer
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