The owner of local battery maker A123 Systems LLC is making a last-minute bid to buy bankrupt Fisker Automotive, a government-backed California automaker that once used A123’s advanced batteries in its Karma hybrid.
Fisker, which filed for bankruptcy protection in late November, was on track to be sold to Hybrid Tech Holdings LLC, a group led by Hong Kong billionaire Richard Li, one of Fisker’s original investors. Approval of the deal had been expected following a hearing Friday.
But now Fisker’s creditors are asking a bankruptcy judge in Delaware to use the hearing to consider an auction at which A123’s owner, the US subsidiary of Wanxiang Group of Hangzhou, China, and other interested parties would bid for the embattled automaker — and likely increase the amount that creditors could recover.
Andrea James, an analyst who tracks the automotive and clean technology markets for Dougherty & Co. LLC, a Minneapolis investment banking firm, said Wanxiang’s efforts to buy Fisker make sense when paired with its purchase of A123 last year. Among other assets, Wanxiang acquired an A123 plant in Michigan, where it could manufacture the Karma hybrid.
“Their bid could represent new life for Fisker,” she said.
Still, James said, Fisker and A123 haven’t been good deals for American taxpayers. Before their bankruptcies, both companies were awarded hundreds of millions of dollars from the Department of Energy — a nearly $250 million grant for A123 and a $529 million loan for Fisker. Only portions of those awards were paid out, but even less was recovered from the companies by the government.
“As far as I understand,” James said, “the US taxpayer will never totally recoup the Fisker investment.”
Wanxiang’s bid for Fisker is reminiscent of its purchase of A123, founded in Massachusetts in 2001 using a technology licensed from MIT. A123 filed for bankruptcy in 2012 after years of bleeding cash as the market for electric vehicles failed to materialize as expected. It was finally pushed over the edge when Fisker slashed its vehicle production and cut battery orders.
Wanxiang later won a court-led auction for the Waltham battery maker, offering $256.6 million to beat out Johnson Controls Inc. of Milwaukee and Japan’s NEC Corp. A government panel approved the sale despite concerns that A123’s cutting-edge technology would end up in the hands of China.
Wanxiang, however, has strong roots in the United States with thousands of employees here and a track record of expanding the local operations of the businesses it buys.
William Baldiga, a lawyer at Brown Rudnick who represents Fisker’s creditors, said he believes Wanxiang’s bid is a better deal for his clients. Among other things, they would receive a 20 percent ownership stake in the reorganized company, Baldiga said, while Hybrid Tech’s ownership would leave creditors next to nothing.
“Wanxiang is, in our mind, a tremendously capable auto company,” added Baldiga, who also represented A123’s creditors when the battery maker was in bankruptcy. “We are delighted that [it] has expressed such a strong interest in this.”