Lutz's VL Automotive, Chinese supplier bid $20 million for Fisker, report says

DETROIT (Reuters) -- A boutique automaker led by former General Motors executive Bob Lutz and China's largest auto parts supplier submitted an offer of $20 million to buy cash-strapped automaker Fisker Automotive, people familiar with the matter told Reuters today.

VL Automotive and China's Wanxiang Group made an offer this month to buy Fisker through a prepackaged bankruptcy deal, the sources said, speaking on condition of anonymity because the discussions are private.

The proposal is one of at least two ongoing efforts to revive Fisker, which terminated the bulk of its workforce to preserve cash and hired bankruptcy advisers earlier this year.

Investors based in Europe and Hong Kong, including billionaire Richard Li, are working on a separate deal to buy $171 million in debt that Fisker still owes to the U.S. Department of Energy, the sources said.

Fisker, which makes the $100,000-plus Karma plug-in hybrid sports car, has not built a vehicle since July 2012.

Officials at Fisker, Wanxiang, VL Automotive and the DOE were either not available for comment or declined to comment. The sources cautioned that the talks were ongoing and may still fall apart.

Lutz likes Karma

Lutz also could not be reached for comment, but he recently touted Fisker in a blog that was posted under his byline on Forbes.com on April 26.

"Let's look at a few facts: the big Karma, designed by Henrik Fisker, is quite possibly the most beautiful four-door sedan ever," the blog said. "The technology, similar to that of the Chevrolet Volt, was ground-breaking and soon to be adopted by many of the leading manufacturers as they seek to meet stringent CO2 and fuel economy rules.

"Introduced at the height of the 'green car' craze, fueled by 'reliable' predictions of 'peak oil' and a rise in gasoline prices to $5 a gallon or over, the moneyed eco-class signed up in droves. Development was fast, but, for the most part, excellent."

Any attempt to revive Fisker faces an uphill battle with future investors, dealers and consumers, said Donn Vickrey, an analyst with research firm Gradient Analytics. In some areas, Karma prices have fallen by half.

"They're literally selling at something at 50 cents per dollar right now," Vickrey said. "That's a lot of confidence lost. I'm not sure how you get that back."

He added that it may be "more feasible" to fold Fisker's operations into another firm, rather than continue to operate the company as a standalone automaker.

Interest in Fisker

More details on the offer from Wanxiang and VL Automotive were not available, but both companies have an interest in Fisker's survival.

In January, Wanxiang won approval to buy Fisker's lithium ion battery supplier, A123 Systems Inc., now B456 Systems Inc., out of bankruptcy. A U.S. judge approved the battery maker's bankruptcy plan this week.

At this year's Detroit auto show, VL Automotive showcased its new car, the Destino, which combines the shell of the Fisker Karma with the guts of a Chevrolet Corvette ZR1.

The company won a $529 million federal loan in 2009 under the Advanced Technology Vehicles Manufacturing program.

But the DOE halted payments in May 2011 when it appeared that Fisker would miss some of its performance and sales milestones.

The terms of the loan have been a source of friction between the DOE and Fisker. Prospective buyers have been unwilling to assume the obligations spelled out in the loans, sources close to the company have previously said.

Last year, Fisker tried to refinance the federal loans through a bond offering that did not gain traction, according to sources and internal DOE documents released last month during a congressional hearing.

In April, the DOE seized $21 million from Fisker's coffers to repay a portion of the loan.

Investors from Europe are working with Hong Kong businessman Li, who is chairman and chief executive of the Pacific Century Group, to buy out the DOE's position in Fisker, most likely at a discount, sources said on Tuesday.

This measure would allow Fisker to wrest free of the loan's current obligations and allow the DOE to recover more than they might get in a bankruptcy. But this route may open the DOE to criticism and raises questions about Fisker's future strategy.

"That's not that uncommon in the financial circles," Vickrey said. "If you can settle that debt at discount and sell the assets to another automaker, it might make sense as an investment."

Automotive News staff contributed to this report.