Hiccup or death knell?
That's what watchers of California-based automaker Fisker Automotive are trying to figure out after the maker of the Karma plug-in luxury sedan laid off about 65 workers and contractors in Delaware and California while renegotiating loan details with the U.S. Department of Energy. Fisker, which was to receive a $529 million loan from the DOE, has received less than $200 million of that, with the fate of the balance in question because Fisker has not met certain loan conditions due to production delays.
Here's the death knell perspective: With the Obama Administration under political pressure to reduce spending, Fisker is unlikely to receive the remaining $336 million, Wunderlich Securities analyst Theodore O'Neill said in an interview with the Boston Globe. Without that funding, Fisker will go out of business, O'Neill said, adding that A123 Systems, which makes lithium-ion batteries for Fisker, will also likely go under.
But no, say others, the problem is temporary. Investment advice site Seeking Alpha, for example, says A123 is a "buy." Fisker also downplayed the issue, with its spokesman, Roger Ormisher, calling the shutdown a "bump in the road" in an interview with The Wall Street Journal. Ormisher said production of the Karma hasn't been impacted, nothing that Fisker has delivered about 250 vehicles, and that the remaining DOE funds are to be used purely for the lower-priced Fisker Nina vehicle.
Fisker said in a statement last week that the company, which most recently received cash from the loan last May, is in talks with the DOE and raised $260 million in equity in late 2011. Fisker is pursuing "alternative funding sources," the company said in a Feb. 6 statement.
Additionally, the Orange County Register reported last week that a Fisker investor is suing the company for fraud. The plaintiff, Daniel Wray, invested $210,000 in Fisker and said the company informed him in January that he had to invest another $84,000 or risk losing the rights he gained with the original stock purchase. Ormisher told the newspaper at the time that he wasn't aware of the lawsuit.