China’s Wanxiang Group emerged as the winning bidder of an auction for the assets of Fisker Automotive, leading to cautious optimism regarding a state loan and a shuttered plant. U.S. Bankruptcy Court in Wilmington approved the deal on Tuesday.
The company beat Hybrid Tech Holding with a bid of $149.2 million. Wanxiang is a large parts manufacturer that has operated a plant for many years in northern Illinois. Reuters reported production of the Fisker Karma could resume in months, presumably at the old Fisker conract manufacturing site in Finland.
The auction was ordered by U.S. Bankruptcy Court in Wilmington. The other bidder was Hybrid Technologies, a Chinese company with car-building aspirations.
Reuters noted the auction for Fisker had Wanxiang’s founder Lu Guanqiu taking on Richard Li who controls Hybrid. Both men are billionaires.
The successful bid left open the possibility that production of the Fisker Karma automobile could end up in Delaware and perhaps set the stage for efforts to build a smaller version known as The Atlantic in the state. The Karma had been built under contract in Finland. Industry analysts have cautioned that chances of building a vehicle in Delaware are slim.
Hybrid indicated it will remain a lender after not upping its bid. Earlier, it acquired a federal loan for Fisker for pennies on the dollar before making its bid for remaining assets of the California car company.
The U.S. Department of Energy decided to sell the loan after determining that Fisker had no chance of building the Atlantic mid-sized plug-in hybrid in Delaware. That could suggest a legal fight if Wanxiang is awarded the bid.
Hybrid’s spokesperson issued the following statement: “Hybrid is entitled to be repaid ahead of the unsecured creditors on account of its security and, in relation to any assets that are ultimately determined to be unencumbered, will share in those assets together with all other creditors. Hybrid will consider taking all necessary steps and appropriate measures to protect its interests in this matter, and remains committed to exploring other long term investment opportunities in the United States.”
Hybrid had been the only bidder for the assets of the car maker that include the former GM Boxwood site near Newport. Hybrid had been expected to attempt to sell the plant and perhaps use the technology in China.
However, Wanxiang, perhaps at the urging of some creditors, entered the process and left open the possibility of building the Fisker in the U.S.
Although the Fisker Karma has been out of production for more than a year, there has been interest in the stylish automobile.
A company led by former auto executive Robert Lutz bought a handful of Karmas with the goal of adding a large Chevrolet Corvette engine.
During his career, Lutz was widely credited with helping to keep both Delaware auto plants open during separate stints at Chrysler and GM by championing the Dodge Durango and the Pontiac Solstice.
The State of Delaware has an interest in the process, since it is a creditor, due to a $20 million financial package that was to have been used to assemble the Atlantic in Delaware.
The higher bid means it might be able to recoup some of that money, although it is one of a long line of creditors.
Plans for the Delaware-built Atlantic were abandoned by Fisker as its Karma faced a host of problems, including a scathing review in Consumer Reports, car battery-related fires and even the loss of hundreds of Karmas during Hurricane Sandy.
During its existence, Fisker was able to attract upwards of $1 billion in private equity money as investors remained intrigued by the striking desing of the Karma.
Gov. Jack Markell has taken heat for the decision to loan money to Fisker, although the move, made during the depths of the recession, generated little criticism at the time the money was approved.
The issue also surfaced in Markell’s re-election campaign and Republican presidential nominee Mitt Romney mentioned the Fisker loan as a reason for the government to not be involved in such programs.
Other critics charged that Vice President Joe Biden exerted influence to grant the Fisker loan and bring auto production back to Delaware after GM and Chrysler closed plants in 2008 and 2009.
The loan program was passed by Congress and signed by President George W. Bush as a way to reduce dependence on foreign oil through new technologies. The bulk of the loans went to major auto makers and start-up electric automaker Tesla and Fisker was one of a handful of loans that went into default.
As the obituaries for Fisker were being written and the company’s liquidation end up in Delaware bankruptcy court, it appeared the state had little chance of recouping its loan.
Then, as the bidding unexpectedly heated up, both Wanxiang and Hybrid pledged to work to build Fisker automobiles at the former Boxwood plant, a move that took many by surprise.
Wanxiang already owns Fisker’s former battery maker A123 Systems, which it acquired out of bankruptcy.
Believed to be the attraction for the bidders is the hybrid technology, which uses electric motors and a smaller internal combustion engine. Fisker is believed to have a number of current and pending patents that might be of some value. That has led to concerns about the technology being used for military or other purposes by China.
The U.S. military has been looking at ways to reduce its substantial fuel costs through research and development. The search for greater fuel economy has also been spurred by deployments in Iraq and Afghanistan that have led to heavily armored vehicles that consumer vast quantities of fuel.
