Fisker Automotive lays off most workers, struggles to find investor


About 160 workers were fired at a Friday meeting at Fisker’s Anaheim, Calif., headquarters, according to a source who attended the meeting. They were told that the company could not afford to give them severance payments. (Kevork Djansezian/GETTY IMAGES)
April 5, 2013

Fisker Automotive, the struggling government-backed hybrid sports-car maker, on Friday terminated most of its rank-and-file employees in what sources said was a last-ditch effort to conserve cash and stave off a potential bankruptcy filing.

Fisker, which raised $1.2 billion from investors and tapped nearly $200 million in government loans, has “at least” $30 million in cash on hand, according to a source familiar with the company’s finances.

About 160 workers were fired at a Friday meeting at Fisker’s Anaheim, Calif., headquarters, according to a source who attended the meeting. They were told that the company could not afford to give them severance payments.

Fisker confirmed in a statement that it let go about 75 percent of its workforce but did not specify the number of workers. It called the move “a necessary strategic step in our efforts to maximize the value of Fisker’s core assets.”

“Unfortunately we have reached a point where a significant reduction in our workforce has become necessary,” Fisker said, adding that it was searching for a strategic partner.

The mass termination triggered a lawsuit seeking class-action status from angry former employees. A lawyer for the fired employees said he expects the company to file for bankruptcy “sooner rather than later.”

A Fisker representative could not immediately answer questions about the company’s financial position. In the past, the automaker has declined to comment on the possibility of a bankruptcy restructuring.

The layoffs, which hit departments including engineering, public relations and marketing, are the latest symptom of Fisker’s cash crunch. In late March, Fisker put its entire U.S. workforce on furlough. It also hired law firm Kirkland & Ellis to advise on a possible bankruptcy filing.

Fisker asked 53 senior managers and executives to stay on board, primarily to pursue buyers for the company’s assets, according to the source who attended Friday’s meeting in Anaheim. The remaining Fisker executives also are continuing negotiations with the U.S. Energy Department.

Fisker, which was founded in 2007, hopes to renegotiate an Energy Department loan payment due April 22, which the source familiar with Fisker’s finances said was about $10 million.

In 2009, the Energy Department awarded Fisker a $529 million loan as part of a U.S. program to finance advanced vehicle development. Fisker pledged its assets, including equipment and property, as collateral on the Energy loan, according to the loan agreement dated Sept. 18, 2009.

The company’s flagship vehicle, the $100,000-plus Karma plug-in hybrid, quickly won accolades for its styling and cachet with celebrities, including pop star Justin Bieber and actor Leonardo DiCaprio, who is also an investor in the company.

Fisker used $193 million of the Energy Department loan and earmarked the rest for a second plug-in hybrid, the Atlantic, but Energy froze the credit line after delays in launching the Karma. The last payment from the Energy Department came in May 2011.

— Reuters

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