By Mike Ramsey and Sharon Terlep
Fisker Automotive Inc., the cash-strapped maker of a battery-powered sports car, recruited investment bank Evercore Partners Inc. to find potential partners or investors, the company’s chief executive said on Friday.
The Anaheim, Calif.-based car company hired Evercore earlier this year when it became clear the company needed a partnership with another auto maker to lower production costs and shore up its finances. Fisker’s search for new capital could result in the sale of the company, people familiar with the process said.
“We are in serious discussions with multiple strategic partners,” said Tony Posawatz, the chief executive officer in an interview on Friday from London, where he was courting investors. “We’ve been working with Evercore on the identification of a strategic partner.”
Evercore, which is known for advising companies like General Motors Co. through bankruptcy restructuring, wasn’t hired to chart a course for a Chapter 11 filing for Fisker, Mr. Posawatz says, but rather to seek out possible buyers and investors.
The company’s board has reviewed the option of seeking bankruptcy protection after a series of setbacks that led Fisker to halt production of its $110,000 Karma sports car in July, people familiar with the situation say.
“Any business always has itself protected, but it has never been part of any plan in earnest,” Mr. Posawatz said in response to a question about seeking bankruptcy protection.
Fisker is seeking investors primarily in China and parts of Europe, where company executives believe there is stronger interest in electric cars than in the U.S.
In its pitch to potential partners, Fisker is making the case that it offers an already-developed battery-powered car that would otherwise cost more than $1 billion to develop, Mr. Posawatz said in the interview with The Wall Street Journal.
The company hasn’t yet attracted significant interest by major global auto makers, most of which have battery-powered or hybrid vehicles of their own, people familiar with the situation say.
To shore up its finances, Fisker has cut its workforce by nearly half in the past year, and is asking current and potential investors for more cash. Several Fisker dealerships have closed, though Mr. Posawatz declined to give a number.
Fisker has received $192 million in U.S. Department of Energy loans as part of the Obama administration’s effort to promote production of electric vehicles. The company is in regular contact with the government about its plans to become viable, Mr. Posawatz says.
Last year, the Department of Energy put a hold on Fisker’s government loan, which was originally for a total of $529 million, after the company missed several development deadlines for a second, less expensive model called the Atlantic, which Fisker has said would be designed to sell for about $55,000 and would be close in size to a BMW 5-series sedan.
Fisker raised $115 million earlier this fall and was seeking $150 million to help it restart its engineering program for the Atlantic.
A Fisker failure would be a political setback for President Barack Obama, whose administration has been under fire by Republicans for lending money to clean energy start up companies that subsequently collapsed.
Solar panel maker Solyndra LLC filed for bankruptcy in 2011 with more than $500 million in loans outstanding from the U.S. Department of Energy.
That failure and the bankruptcy of battery makers—such as A123 Systems Inc. —that also received government grant funding, have led some Republican lawmakers to ask for investigations into the federal investments in Fisker and rival electric-car startup Tesla Motors Inc.
Tesla is ramping up production of its new Model S sedan at a former GM factory in Fremont, Calif., and the company’s chief executive, Elon Musk, wrote in a tweet earlier this week that Tesla was now generating cash from operations.
Fisker, however, has struggled with a series of recalls of the Karma and production problems. The company has blamed the production stoppage in part on uncertainty about the future of A123, which makes the batteries for the Karma. A123 is in the midst of a bankruptcy restructuring and bids for its assets are expected Friday.
Mr. Posawatz said Fisker has about 100 battery packs available for service and repairs but not enough to restart production. If A123 doesn’t start shipping batteries, Fisker’s inventory of vehicles on dealer lots will disappear by spring. The company lost about 300 cars that were damaged when Hurricane Sandy hit a New Jersey port.
Fisker has renegotiated its contract at the Finnish plant that builds the Karma to lower costs, Mr. Posawatz says. When production restarts, sales of the Karma should make the company a variable profit—something that wasn’t the case before the new contract, he says.By
By WSJ Staff