The Chinese automaker that was in talks to buy struggling Fisker Automotive has backed out, Reuters reports, leaving Fisker without its best bet for avoiding bankruptcy.
Geely, which owns Volvo and is one of China’s biggest car manufacturers, was reportedly on track to acquire Fisker, but dropped out of talks due to conditions that come with paying back the $193 million Fisker has borrowed from the United States Department of Energy.
A new Fisker owner would not have to take any more money from the DOE, but Fisker does come with technology developed with American taxpayer money, and it’s unclear how compensation of the $193 million Fisker has already spent would work.
$23 million of that was used to purchase and refurbish an old General Motors plant in Delaware, which is supposed to be produce the Atlantic, Fisker’s high-volume model, and create about 2,500 American jobs — the crux of the DOE’s justification for making the loan.
A source familiar with the case told Reuters:
Those obligations are too complicated to handle and seem too risky. The plan’s footprint was too big. It would take a long, long time to fill up the plant with products and restore employment there.
According to Reuters’ sources, the resignation last week of Henrik Fisker, who co-founded the futuristic car company in 2007 and designed the Karma and Atlantic models, did not have an impact on Geely’s decision to back out of talks.
On Monday morning, Reuters reported that another Chinese automaker, Dongfeng Motor, has submitted an offer to buy a majority stake in Fisker, but according to the Wall Street Journal, the company has also backed away from a deal.
If nothing materialises and Fisker does go bankrupt, American taxpayers — through the DOE — would have first lien on its assets, so some of the $193 million could come back.
Things have not gotten that bad just yet: Fisker spokesperson Russell Datz said the company is still having talks with multiple interested parties. The details are confidential, but he said “the company is pleased with the level of interest from potential partners.”
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