DETROIT (Reuters) -- The U.S. Department of Energy will consider bids to purchase Fisker Automotive's government loan on Friday in what could be the start of a lengthy and expensive process to revive the dormant green-car startup.
Fisker, which has not built a car in about 15 months, does not have enough money to pay millions in outstanding bills. The company laid off most of its employees in April after running short of cash, a month after co-founder and executive chairman Henrik Fisker resigned.
The Department of Energy said last month that it planned the auction after "exhausting any realistic possibility" that it could recoup the entire $168 million still owed by Fisker.
Bids to buy Fisker's DOE loan were due Oct. 7 and an auction is still planned for Friday, despite a U.S. government shutdown that began 10 days ago.
Prospective bidders had to offer at least $30 million to qualify, with 10 percent down due with the bid, two people with knowledge of the process said on Thursday.
But restarting the company will cost considerably more. A reinstatement of Fisker's original plan to build several models could cost up to half a billion dollars, according to people familiar with the company's finances.
The sources declined to be named because details are confidential. The Energy Department declined to comment on the details of the bidding process. Fisker and its restructuring firm Kirkland & Ellis could not be reached for comment.
U.S. officials could select a winner as soon as next week. DOE and the winner will then pin down the final details of the note sale. A public announcement may come later this month.
DOE extended a $529 million loan to Fisker in 2009 under a U.S. program to promote green vehicles. But after Fisker missed performance targets, DOE froze its credit line in June 2011 after Fisker drew down $192 million.
The Anaheim, California-based Fisker has been able to avoid a Chapter 11 bankruptcy filing because investors are paying its day-to-day expenses, people familiar with matter have previously said.
Several top officials have left the company since April, including former CEO Tony Posawatz and former CFO Jim Yost, sources said, adding that Barny Koehler, one of Fisker's two founders, remains at the startup.
Big drop in value
The $30 million minimum set by the DOE is a far cry from Fisker's estimated worth 18 months ago. In the spring of 2012, Fisker completed a fundraising round that valued the company at $2.2 billion, according to regulatory filings analyzed by venture capital data provider VC Experts.
But Fisker's worth fell sharply after the shaky launch in late 2011 of its flagship model, the $100,000-plus Karma plug-in hybrid sports car, and the disclosure in early 2012 that DOE had frozen access to funding. Fisker's plans to build a second model, the smaller Atlantic sedan, were then put on hold.
At least three groups have sought to buy Fisker this year, including German investment group Fritz Nols AG. Fritz Nols was among those who submitted a formal bid to buy the DOE loan this week, two of the sources said. The firm declined to comment.
A team that includes Chinese auto supplier Wanxiang Group and former General Motors vice chairman Bob Lutz also submitted a bid this week, one person familiar with the matter said. Pin Ni, head of Wanxiang's U.S. division, declined to comment. Lutz could not be reached for comment. This group previously tried to buy the automaker for $20 million.
It was unclear how many others submitted formal bids.
Previously, another group led by Hong Kong billionaire Richard Li proposed buying Fisker's government loan for between $25 million and $30 million.
Buying the DOE loan would give the company a chance to mount a comeback under new ownership. But the new owner faces considerable start-up costs and potentially thorny negotiations with creditors who are still owed millions.
Fisker owes suppliers about $80 million and owes a little less than $10 million to Valmet Automotive, which built the Karma under contract in Finland, two of the sources said.
It could cost around $500 million to restart development of the Atlantic, although the final figure would depend on the new owner's strategy, sources said. Restarting Karma production would cost at least $50 million, they estimated.
The Atlantic was slated for production at Fisker's still-unfurnished factory in Delaware. The car, which was to have a base price of $55,000, was intended to provide a base for additional Fisker models.