SOSS Editor Note: A prime example of the US Governments wanton wasting of money on energy related FAILURES!!!
The sad long story of Fisker Automotive, ‘the largest VC-backed debacle in U.S. history
’Read more at http://venturebeat.com/2013/04/17/the-sad-long-story-of-fisker-automotive-the-most-tragic-vc-backed-debacle-in-recent-history/#bfaPySXEBeX6sZGD.99
April 17, 2013 4:35 PM
In January 2005, legendary car designer Henrik Fisker founded a company to bring innovative new thinking to the automobile industry.
Between that date and today, Fisker Automotive would create perhaps the most beautiful car ever made, raise almost $1.4 billion dollars from investors as diverse as Leonardo di Caprio and Kleiner Perkins, obtain a $528 million loan from the U.S. Department of Energy, balloon to 600+ employees, default on loans or investment conditions at least four separate times, spend $535,000 on a website, get sued by its own employees, get evicted from its primary business location, and be investigated by the government — apparently for its incredible ability to burn a billion dollars while delivering only a few thousand actual completed cars.
What a wild, crazy ride it’s been.
“Fisker spent a stunning $900,000 for each vehicle it produced,” PrivCo chief executive Sam Hamadeh told me. “Then they sold them to dealers for an invoice price of just $70,000.”
PrivCo, the intelligence source on non-public companies, has compiled an exhaustive dossier on Fisker, its cash, its commitments, and its massive failure to produce anything like a functional, profitable business. While burning through $1.4 billion dollars, it produced fewer than 2,200 cars, PrivCo data shows, 600 of which remain unsold on dealers’ lots. And 1,200 investors, which include university endowment funds and company pension plans, are learning that their cash has been completely wiped out.
The government was grossly negligent in both its issuing of the Fisker loan — the biggest public loss since the infamous Solyndra Solar debacle, which cost the government as much as half billion dollars. Not only did the U.S. Department of Energy apply “negligent underwriting standards” in granting the Fisker loans, it also failed to enforce the loan conditions as Fisker breached the loan terms, PrivCo says. That failure cost the U.S. taxpayer an extra $192.3 million.
That’s bad enough. But sadly, it gets even worse.
Even as Fisker continued private fundraising efforts, when the DOE privately issued a Drawdown Stop Notice to halt payments to the stumbling car company, it failed to warn future investors that Fisker was in default. As PrivCo writes in its report:
U.S. Department of Energy made no announcement to the public that Fisker was in Default of Its Loan and Credit Agreements and no longer had access to the remaining balance of $336.4 Million, resulting in continued reliance on hundreds of additional individual investors purchasing Fisker stock in the hundreds of millions of dollars through the Advanced Equities “Fisker Funds” limited partnerships as well as reliance on that reasonable assumption that Fisker had continued and substantial access to the remaining $336.4 Million of credit line liquidity through the U.S. government.
At the end of the long, sad story, Hamedeh says, Fisker has less than $20 million cash in hand, has stopped paying all creditors, and faces multiple lawsuits.
“Fisker Automotive may well go down as the most tragic venture capital-backed debacle in recent history,” Hamadeh said in a statement. “The sheer scale of investment capital and government loan money — over $1.3 billion in all — was squandered so rapidly and with so little to show for it that the wreckage is breathtaking. Bankruptcy will be the end of Fisker, but for the taxpayers, venture capital firms, individual investors, and Fisker’s suppliers, it will all be too little too late.”
Former Maine Governor's Wind Energy Company Investigated by Congress along with many others.
The Maine Wire -- DEVELOPING: KING WIND PROJECT CITED BY CONGRESSIONAL INVESTIGATION
Report Refers to project as part of a pattern of “dysfunction, negligence and mismanagement”
Just a day after Angus King announced he was divesting his stake in his wind energy company, a Congressional Oversight Committee has called into question the basis for a $102 million loan guarantee granted to King’s Record Hill Wind project.
The U.S House of Representatives Committee on Oversight and Reform yesterday released an extensive report on questionable funding for projects authorized through the U.S. Department of Energy. The report, titled “The Department of Energy’s Disastrous Management of Loan Guarantee Programs”, reveals that the Record Hill project received a loan guarantee based on “questionable reasoning” by King’s company.
From the report:
“After conducting a substantial review of the Department of Energy’s (DOE) loan guarantee program, it is clear that the significant losses absorbed by taxpayers as a result of Solyndra’s collapse is just the beginning. The investigation conducted by the House Committee on Oversight and Government Reform has uncovered numerous examples of dysfunction, negligence and mismanagement by DOE officials, raising troubling questions about the leadership at DOE and how it has administered its loan guarantee programs.”
The report shows that the Department of Energy (DOE) “approve[d] Record Hill Wind’s $102 million loan guarantee project as “innovative,” despite the project using commercial technology. DOE knew that the Record Hill project did not use significantly innovative technology.”
“the Record Hill Wind project attempted to categorize minor modifications to existing commercial technology as “innovativeness.” DOE eventually agreed with Record Hill Wind’s questionable reasoning”
In 2011, Independence Wind partners Angus King and Rob Gardiner celebrated the federal loan guarantee in a press release:
“The U.S. Department of Energy has issued a conditional commitment for a loan guarantee to cover a portion of the cost of constructing the Record Hill wind project… “We’re delighted that the exhaustive review done by the Department of Energy’s Loan Programs Office has resulted in this step toward making the project a reality,” said Independence Wind, LLC President, Rob Gardiner.”
The report’s release calls into question the timing of King’s announced separation from Independence Wind. Just a day before the Oversight Committee released its findings, King announced he would separate himself from Independence Wind to avoid a conflict of interest. According to theAssociated Press:
“Independent Senate candidate Angus King completed the transfer of his stake in a wind energy company he co-founded to his business partner and said Monday he would go one step further to avoid any appearance of a conflict of interest by placing his investments in a blind trust.”
According to King’s campaign spokesperson Crystal Canney, King originally scheduled interviews last Friday to spread the word about his disassociation with Independence Wind. MPBN reported Friday the 16th that King had filed the paperwork to dissolve his relationship with Independence Wind, and that, “As a result, any financial benefits he might have received from federal energy subsidies as a principal in the company will no longer be valid issues in his campaign.”
Canney said that King had no knowledge of the Oversight report until it was released publicly this week.
“Angus is smart, but he is not clairvoyant.”
http://www.themainewire.com/2012/03/developing-king-wind-project-cited-congressional-investigation/ (This story was updated at 3:44pm)
Details of King’s project can be found on page 63 of the report below.