Fisker Automotive lays off most workers, struggles to find investor
Struggling carmaker Fisker Automotive laid off 160 employees, most of its staff, Friday as it struggles to reach a financing deal that would save the maker of the Karma hybrid sports car.
The Anaheim company dismissed all but a core group of about 40 workers needed to keep the business running as it continues talks with three Chinese businesses considering buying or investing in Fisker, according to individuals familiar with Fisker’s strategy.
“They pulled back another layer as they try to work out a last-minute deal. They need to do a deal quickly and they know it and are working on it,” said Mike Sullivan, who has a Fisker store among his chain of LACarGuy dealerships in the Southern California.
Last month, Fisker hired Kirkland & Ellis, a major bankruptcy law firm, to review the company’s options while it continues to seek investment partners.
One laid-off employee said workers were told Thursday night there would be a meeting Friday. At the meeting, they were given their accrued vacation pay and dismissed. There was no severance pay. This comes after the automaker made workers take a one-week furlough last month to preserve cash.
Fisker has been working for months to raise $500 million so it could restart production of the Karma, its only model, which was built in Finland. Fisker stopped making the $110,000 plug-in hybrid last year after A123 Systems Inc., the maker of its lithium-ion battery, filed for bankruptcy.
The company ran into a cash crunch after the federal government froze an Energy Department loan. Fisker is supposed to make the first payment on some of $192 million it borrowed from the government later this month.
Fisker is trying to work deals with three different Chinese companies, including Geely Holding Group, which owns Volvo, and Wanxiang Group Corp., which recently bought A123 Systems out of bankruptcy. The other bidder, according to an individual familiar with the negotiations, is a business owned by the Chinese government.
Regaining access to the Department of Energy loan, which would make Fiskers more attractive to potential investors, is the biggest obstacle to a deal, according to people familiar with the negotiations.
Potential buyers would want to tap into the federal money to restart the business and launch work on a second model, the Atlantic, a $55,000, four-door rechargeable sports sedan. However, the government is reluctant to extend more credit without getting guarantees for U.S. employment and setting milestones for the development of the next vehicle.
Henrik Fisker, the automaker’s executive chairman and founder, quit the automaker last month in what he described as a management dispute.
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