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Updated: Some good news and bad news for the beleaguered battery maker Ener1. On Thursday, the company announced that it’s filing for voluntary Chapter 11 in New York, but has done so under a pre-arranged restructuring plan that includes commitments for an injection of up to $81 million from Ener1’s existing investors.
So the company is looking to live again, and says if approved, it will use the restructuring and equity to continue operations, and will meet its commitments to its suppliers and customers and employees.
Ener1 is officially off the Nasdaq; it was first delisted in Oct. 2011. After this restructuring plan, Ener1 says all that common stock will be “extinguished” and current equity holders “will not receive any distributions.” That’s fun.
One of Ener1’s biggest problems was its support of electric car maker Think, which headed into bankruptcy itself last year. Ener1’s current CEO (the former CEO left a couple of months ago as well as many key execs), Alex Sorokin, explains the market falter in a release Thursday as:
Our business plan was impacted when demand for lithium-ion batteries slowed due to lower-than-expected adoption for electric passenger vehicles. That pressure was exacerbated by volatility in the debt and equity markets that further limited our borrowing ability and the loss of a major customer, Think Global, which filed for bankruptcy in June 2011, and for which we were exclusively providing commercial lithium-ion battery packs.
The restructuring could also shine a light on Ener1’s previous government support. Ener1 is the parent company of EnerDel, which if you remember back to summer 2009, received a $118 million grant from the Department of Energy’s $2.4 billion Electric Drive Battery and Component Manufacturing Initiative.
EnerDel received the funds to help it build a factory that would produce batteries for electric vehicles. The DOE told Inside Indiana Business last year that EnerDel has received $55 million of the grant, and the DOE is closely watching Ener1 and EnerDel.
Update: DOE spokesperson Jen Stutsman emailed me this statement on Ener1’s bankruptcy plans:
The Department of Energy’s grant to EnerDel is supporting a cutting-edge battery manufacturing plant that is producing batteries in America that are being sold across the country and around the world. This grant is part of the Department’s efforts to commercialize promising vehicle technologies that will help America to reduce our dependence on foreign oil and ensure U.S. companies can compete in the global auto industry. While it’s unfortunate that Ener1, the parent company, has entered a restructuring process, the new infusion of $80 million in private capital demonstrates that the technology has merit. As the company has said, the restructuring is not expected to impact EnerDel’s operations and that they do not expect to reduce employment at the site.