Fisker Firing as Much as 75% of Staff as Deal Evades Carmaker

4/5/2013
BLOOMBERG NEWS

ANAHEIM, Calif. — Fisker Automotive Inc., a maker of luxury plug-in cars seeking investors to fund operations, said it’s firing about 160 people -- 75 percent of its workforce -- after failing to secure a deal with an automotive partner.

The maker of rechargeable $103,000 Karma sedans expects about 25 percent of workers to stay, the Anaheim-based company said in an e-mailed statement. Fisker had about 200 employees prior to today’s action, the company said.

“Our efforts to secure a strategic alliance or partnership are continuing in earnest, but unfortunately we have reached a point where a significant reduction in our workforce has become necessary,” the carmaker said in the statement. The cuts are a “strategic step in our efforts to maximize the value of Fisker’s core assets,” the company said.

Fisker has struggled since halting assembly of rechargeable Karma sedans last year when the supplier of the car’s lithium-ion batteries, the former A123 Systems Inc., filed for bankruptcy. Henrik Fisker, the auto designer who co-founded the company, quit last month over unspecified disagreements with other executives.

Henrik Fisker today declined to comment about the job cuts. Two telephone messages left with Chief Executive Officer Tony Posawatz weren’t returned.

Today's layoffs cast doubt on Fisker's ability to repay a loan from the U.S. Department of Energy that was made to help the automaker get started. In 2011, the Energy Department suspended the $529 million loan after introduction of the Karma was delayed due to trouble with battery packs. Fisker got $193 million from the government before the payments were stopped in May of 2011.

Last week, China’s Dongfeng Motor Group Co., a carmaker that had considered buying a stake in Fisker, said those discussions were over. Fisker has repeatedly declined to identify specific companies it’s talking to.

The closely held carmaker retained restructuring lawyers from Kirkland & Ellis LLP, said a person familiar with the matter who declined to be identified because the move isn’t public. The law firm’s corporate bankruptcy and restructuring practice is one of the biggest in the United States.

Fisker, founded in 2007, has sold about 2,500 plug-in cars. The company has said it was seeking investors to raise funds for a second model, the Atlantic, to be priced lower than the Karma.