Richard Li

Wanxiang raises bid for Fisker in battle with rival suitor owned by Richard Li

Chinese firm raises its bid by US$10m after US maker of electric cars presses for sale to Hybrid

PUBLISHED : Thursday, 09 January, 2014, 1:10pm
UPDATED : Thursday, 09 January, 2014, 11:34pm

Chinese car parts conglomerate Wanxiang has increased its offer for Fisker Automotive, heating up the fight for the failed US maker of electric vehicles.

Wanxiang sweetened its bid with an additional US$10 million in cash, raising what it hopes will be the starting bid in a competitive auction to about US$35.7 million.

William Baldiga, a lawyer for Fisker’s official committee of unsecured creditors, told US Bankruptcy Court Judge Kevin Gross that Wanxiang might increase its offer even more if the judge approves its proposed sale process.

“They have told us they have considerable room to go,” Baldiga said.

Fisker’s lawyers, meanwhile, are pressing the judge to approve a private sale to Hybrid Technology, which is owned by Hong Kong billionaire Richard Li Tzar-kai.

Hybrid became Fisker’s senior secured lender by buying a failed US Department of Energy loan for US$25 million late last year. That resulted in a loss to US taxpayers of US$139 million.

California-based Fisker, which had planned to build high-priced cars at a former General Motors plant in Delaware, filed for bankruptcy protection in November, ending a long, downward spiral that began after it received a US$529 million loan commitment from the Department of Energy.

Fisker drew US$192 million on the Obama administration’s green-energy loan before department officials suspended funding in 2011 after the carmaker failed to meet several sales milestones for its problem-plagued Karma luxury vehicle.

Under Hybrid’s plan, unsecured creditors that are owed an estimated US$250 million stand to receive only a fraction of a cent on the dollar.

Baldiga said Wanxiang’s offer could result in a recovery for unsecured creditors of 50 cents or more on the dollar but that Fisker has been unwilling to consider a competitive auction.

Lawyers for Fisker and Hybrid have argued that the sale to Hybrid needs to be approved quickly, but lawyers for the US trustee and unsecured creditors expressed reservations about the speed with which Fisker was moving.

Gross told lawyers he would not be pressured by Hybrid into making a decision at the hearing on Friday.

Hybrid is seeking to buy Fisker’s remaining assets in bankruptcy using a US$75 million credit bid. That’s based on the money it is owed as the company’s senior secured lender rather than cash.

Wanxiang’s cash offer includes US$25 million for the department’s loan collateral, equal to what Hybrid paid for the loan balance. Wanxiang wants to level the playing field for a competitive auction by capping Hybrid’s credit bid at US$25 million.

But Fisker lawyer Ryan Preston Dahl told Gross on Wednesday that there was no reason for the court to cap Hybrid’s credit bid at US$25 million. Dahl said that would be a key issue for Gross to resolve at the hearing on Friday.

Wanxiang made a previous attempt to acquire control of Fisker and, in a separate bankruptcy case, recently bought the company that served as Fisker’s primary battery supplier, A123 Systems.