Fisker Expects To Pick Up $529M Loan By Mid-March

By Venture Capital Dispatch

February 8, 2010 – (Motor Sports Newswire) – Electric-car maker Fisker Automotive expects to close on a $529 million low-cost loan agreement with the U.S. Department of Energy in mid-March, said Henrik Fisker, the company’s chief executive, in an interview with VentureWire.

The Irvine, Calif.-based start-up is working on various fronts to meet the conditions to close the loan, which the DOE offered to provide on a conditional basis in September. As part of meeting some of the milestones to ink the deal, Fisker closed last month on a $115.3 million new equity round and announced in October plans to buy an assembly plant in Delaware to build a family vehicle that will retail for $47,400 before a $7,500 federal tax credit.

According to the documents covering the conditional loan available on the DOE’s Web site, the offer expires Feb. 15, 2010, but the government can extend it, as it did when closing the loan for Tesla Motors Inc., a maker of fully electric vehicles. Tesla closed on its $465 million loan last month, as opposed to a conditional deadline of Oct. 31, 2009.

Like most companies in need of capital to grow, Fisker’s fund-raising plans were affected by the economic slowdown.

“We had a delay in our business plan last year, so we’re now adjusting it,” Fisker said. “There was no technical issue; investors simply are coming out later with the money than planned.”

The loan, provided under the Advanced Technology Vehicles Manufacturing Incentive Program, or ATVM, will provide a maximum of 80% of the costs of two projects: finalizing the development and engineering of the Karma, and supporting the engineering and manufacturing of the family car, a yet-to-be named plug-in hybrid slated for 2012.

According to the DOE commitment documents, Fisker is required to achieve minimum equity milestones that include $35 million at the delivery of the conditional commitment letter by the DOE; $122.8 million at the closing of the loan; $27.2 million by Feb. 15; and $50 million by Oct. 31, 2010. That $50 million amount is the same as included in the company’s business plan.

The recent equity funding round provided the company with the equity required to meet its equity commitment under the DOE ATVM loan.

The loan for the Karma project, or $169.3 million of the total, has a seven-year maturity, and the loan for the family-car project, or $359.4 million of the total, has a 16-year maturity, according to the conditional offering documents.

Fisker expects to start delivering its Karma vehicle later this year, and said it has received $5,000 deposits from 1,600 people interested in purchasing the four-door car, which can travel 50 miles on its battery power before having to access the gasoline engine that will give it a range of another 250 miles.

One of the milestones Fisker committed to reach under the conditional loan is to sell 11,000 Karma cars at an average price of $87,900 by Sept. 30, 2011, but that number is likely to be different in the final loan contract, also owing to the delay in financing that pushed back the business plan, said Fisker. He declined to disclose the new target, saying only that “it won’t be far away from [the 11,000].”

The company plans to have its first full year of volume production for the Karma in 2011.

Last week, Fisker announced the transfer of its engineering, sales and marketing teams to headquarters from Pontiac, Mich., concentrating its full staff under one roof to speed up development of the vehicles. Fisker said in the interview the move was planned and will save the company in travel costs.

Kleiner Perkins Caufield & Byers is one of the main investors in Fisker. The latest round of financing brought in lithium-ion battery technology developer A123 Systems Inc. and Ace Investments, a Hong Kong investment firm associated with Richard Li, the chairman and executive director of Hong Kong-based telecommunications company PCCW Ltd., as new investors, besides Kleiner.

Fisker has raised around $190 million in private funding since its founding. Other key investors in the company include investment firm Palo Alto Investments LLC, Qatar Investment Authority and Quantum Fuel Systems Technologies Worldwide Inc., a maker of power trains.

The cash would go toward the Karma and a yet-to-be-named plug-in hybrid family car slated for 2012.

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