Will Fisker’s investors sue?

53 Comments

When I first saw the headline for Reuter’s detailed Fisker story, I thought (sigh) does the world need yet another investigative piece on electric car maker Fisker? We published our tome back in mid-April. But the Reuters article actually lays out some of the most disturbing evidence that Fisker was painting two very different pictures to investors and the Department of Energy, and also could potentially provide fodder if Fisker’s investors plan to sue the company (a lone investor already sued over this back in February 2012).

Essentially the article lays out that for about a year — from the Summer of 2011 to the Summer of 2012 —  Fisker’s finances were unraveling, and while the DOE was informed of this, the company’s investors appear to not have been aware of Fisker’s financial problems, at least according to the Reuters report. If you believe that, then the next question is naturally: did Fisker’s executives and board twist the story intentionally to its investors, or unintentionally?

Ray Lane's Fisker KarmaWe already know that Fisker’s access to much of the DOE was loan was cut off in mid 2011, but that Fisker didn’t publicly acknowledge this until February 2012. But Reuters reports that Fisker told the DOE it was nearly broke in October and December of 2011, but was telling investors at that same time that Fisker’s value was at almost $2 billion, with a planned annual sales of more than $12 billion.

Reuters reports that in a December 14 letter to shareholders, Fisker told investors that the company’s $2 billion capitalization included $720 million in private equity (which had been spent), the total $529 million DOE loan (even though Fisker only accessed $192 million before being cut off) and a $700 million value on the Delaware plant (which was idle and that number was 30 times its purchase price).

And again in August 2012, Fisker painted a different story to investors than it did to the DOE, reports Reuters. Fisker was down to $12 million in cash, and the DOE recommended an emergency sale. But in an investor presentation in August 2012, Fisker didn’t mention its low cash or the DOE’s recommendation while it was attempting to raise $150 million in equity by September 2012.

The Reuters piece has some other eye-brow raising financial tidbits like:

  • Fisker was losing $35,000 on each Karma made.
  • Founders Henrik Fisker and Bernard Koehler were making $600,000 to $700,000 a year.
  • In the Spring of 2011 Fisker spent $100,000 on a grand prix party on a yacht that was attended by the Prince Albert Monaco.

53 Comments

Peter E

MW, you are right on the money with your comment! From what I have gathered, the DoE pressed the company to adopt very aggressive / optimistic milestones. Then supply chain issues from parts manufacturers and the EPA was delayed something like 6 months in certifying the cars — caused them to miss those milestones (even though the DoE itself has stated that such delays are not unusual in high-tech ventures). While it’s hard to say if election year political pressure — from Romney and the other anti-everything Obama Conservatives — played a part, it certainly seems like DoE could have given them a bit more slack. Especially since another government agency was partially to blame for the company’s problems.

MW

Companies are required to show accounting information at investor briefings. The combination of the lack of DOE contribution (even if portrayed as a “choice” by the CEO) when the company balance was so low, sales far below projections, and minimal further investment should have told the story by itself regardless of any rosy pictures being presented. I would like to see a story on how the DOE milestones were set and the decision making process for yanking the funding. If the funding of a car company is a DOE mission, it should have been for the long haul, and not terminated based on arbitrary milestones. DOE’s decisions sank the company and that process should be rethought.

Peter E

Actually, I agree with Tony B that the lack of communication has been a major problem. But the company has been under siege for so long, it’s (almost) understandable. No startup could have weathered the storm (pun intended) of problems and unrelenting attacks they’ve had to deal with. The best thing they could do for their investors and their customers is to keep the company afloat and intact until sufficient funding could be arranged to get them back on their feet. The so-called “green car media” has largely just piled on, making the problem worse. They will all look pretty foolish when Henrik and Richard Li rescue the company, launch the Atlantic, and successfully take their company public in a few years. I’m rooting for them — and it seems a lot of the readers here do, too. I wish Katie would realize that we have nothing against her. It’s just that we want want someone in her position to reflect our point of view — and not the “conventional wisdom” of the media that wants us to believe the company is toast.

Tony B

Gosh, what an attack on Katie! I know several owners who love their cars, but can’t understand how Fisker can leave them high and dry. Ok, so they’re trying to save the company and find a buyer, but don’t drop those people who are your strongest supporters. Communication is always key!

I do know for a fact that management was completely incompetent, was paying themselves ridiculously high salaries, submitting outrageous expense reports, and not paying their bills. This is what I learned in early 2011 (not through the media, but through connections with the company) so none of this surprises me. I think the company could have (or could) do well with a complete change in management, engineers, etc.

Nicjones

Tony B your comments are even more ridiculous than the article. Have you not followed Fisker’s issues or read the comments. We are several consumers on this forum and don’t feel the way you describe it. We are rooting for the company to get back on its feet. The company went downhill when they brought in Detroit management- Tom Lasorda and current CEO Tony Posawatz. The worst decision that Fisker took was to get these big budget CEO’s to run the company to ground. Yes you are right, the new investor needs to kick Tony P out as he is super incompetent, and get a better management with the support of original founders.

Tony B

Nicjones, my comments are more ridiculous? Of course I’ve been following all the issues that have faced Fisker. If you read my “comments” more thoroughly, I was not speaking for all consumers. I was talking about the few owners that I personally know and that feel basically “abandoned”. This has nothing to do with them not rooting for the company. They of course want Fisker to survive, as do I. However, someone (anyone remaining at Fisker) should let these consumers know that they have not been forgotten.

There are a lot of haters out there. Again, I’m not one of them. The Karma is gorgeous, and I still have hopes for The Atlantic. But management sucks, and my hope is for a complete change in management and ownership with Henrick as the lead designer.

Robert David Allam

Tony B is quite correct. I know one of the Directors very well and a more unpleasant, untrustworthy individual you would look far to find. In any event the discussion is not about the car but are the Directors liars. Why shoot the messenger ?

Peter E

If that’s the case, then I apologize for implying there is / was a relationship. But then again, I specifically stated that I “don’t believe” you ever denied it (which was true when I said it) followed by “if this is true…” — indicating that I was not accepting it wholly as fact. So that’s pretty much the same as you saying that you aren’t making potentially defamatory and damaging claims about Fisker because you are carefully couching your accusations as questions or simply “reporting” the accusations of others as fact, rather than actually seeking the facts. In any case, this is getting tiresome. Please do us all a favor Katie and show your readers that you are the unbiased reporter we thought you were when we started reading you. Reach out to Henrik Fisker, ray Lane, and Richard Li and promise to write an unbiased piece that gives the world a chance to hear their side of the story. From what I’ve heard, there’s a lot more going on behind the scenes than Reuters knows about.
I’m sure your readers — who seems more pro-Fisker than you probably realized — would greatly appreciate it.

You are in an

Peter E

OOOPS, sorry about that last paragraph. there was a problem with the website. I was trying to point out that I had read in comment by a reader a while back that Katie had a close relationship with someone (a husband, perhaps) who was (or possibly still is) involved with Tesla — a fact which I don’t believe she ever denied. If this is true, it would explain a great deal about her rather non-journalistic point of view.

Peter E

Jerry, You have no idea who I am if you think I have anything at all to apologize for — since I have nothing to do with the management of Fisker and have no idea what other company you are referring that I am supposed to associated with. I am a very minor investor in Fisker, that’s it. And I’m not thrilled with the way the company was screwed over by the DoE, the EPA, A123 (their battery maker), their other suppliers of faulty parts, Romney and the Right Wing…and, most sadly of all, the so-called journalists who couldn’t resist taking cheap shots at a company that, with a few breaks, would be flying higher than Tesla right now. As for attacking Katie, I am not attacking her any more than she has not been attacking Fisker. I have been following her coverage of Fisker for a while — and have been dismayed to see the way she has taken obvious joy in their troubles. She uses headlines that cleverly use questionmarks like daggers — to imply that a situation is worse than it really is. So, Jerry, before you accuse me — or anyone — of having to apologize to anyone, get your facts straight. And don’t hide behind the name of Jerry Seinfeld — a real car guy who, Im sure would not be happy to see his name being used in this way.

really it recalsomeone pointing out that she had a close relationship with someone (a husband, perhaps) who was (or possibly still is) involved with Tesla — a fact which I don’t believe she ever denied.

Nicjones

Jerry the person who needs to apologize to investors are the journalists who are writing negative blogs. A company is not only made up of investors. I am a customer and I am tired of journalists and bloggers writing articles with no basis to them. Katie’s article has given me an insight that the 2000 customers/owners and investors need to get together and collect all the negative articles, specially Reuters that aided disgruntled employees to compromise the company and explore a class action lawsuit for conspiracy to kill Fisker. Reuters gets so much add revenue from Detroit that such an article damning Fisker and Tesla would be a part of their revenue model. I respect Elon, he is smart and has managed PR well.

Jerry Seinfeld

Peter E. I know who you are. Stop harassing the writer of this article and start apologizing to investors. I know what your role in these two companies were. Tell the truth!

Peter E

Katie, I find it quite interesting that the only person who seems to be taking your side is some joker claiming to be Jerry Seinfeld — whose only contribution is to accuse me and Nic of either being former employees of Fisker or Advanced Equities. (BTW: I’m neither).

Ballywho?

From my recollection, Tesla was down to their last nickel at one point. You probably know more than me though. It takes money for R & D from what Elon says. Have you ever been a part of a startup? Were there any difficult times with those companies you were a part of or investor in?? Also also, seems like the big autos have taken on their chins a few times. BTW, I only troll for fish, not trash, just sayin’

Katie Fehrenbacher

yes, it’s the evil blogs that made fisker lose a billion dollars of other people’s money

also, you guys do know the company is barely in existence anymore right? just checking if that was your definition of a great startup.

and finally, i know your trollin. but so am i. happy trolling!

Ballywho?

From my recollection, Tesla was down to their last nickel at one point. You probably know more than me though. It takes money for R & D from what Elon says. Have you ever been a part of a startup? Were there any difficult times with those companies you were a part of or investor in?? Also also, seems like the big autos have taken on their chins a few times. BTW, I only troll for fish, not trash, just sayin’

Nicjones

Katie actually it is the negative blogs that ruin a brand and reduce consumer confidence. Negative PR and specially groups like Reuters (and rehashed versions on your blog and others like Jalopnik), result in a compounded reduction in confidence. As sales slow down or slide down, a companies cost go up. Add to that a bust battery maker, hurricane Sandy and Reuters on witch hunt constantly printing confidential information about Fisker and reducing their chances of getting an investment or a buyer as they print their bids (the Geely and DFM bids), what do you get: a company in distress. So you see how you have contributed to the hundreds of employees and engineers who lost their jobs and probably have their families suffering. Now you are trying to stir up investors to make lawsuits. Why?

Wallcon

“Fisker lost a billion dollars of other people’s money” This is Katie’s “reporting”. Just sharing lies. Lie is a lie even if everyone believes it, dear Katie.

Ballywho?

Again, why are Americans trash talking a great startup. Makin’ cars ain’t cheap and this is truly a great car. Finally one from the US.

carenthusiast

Sure does seem like the blogs are anti-Fisker. It’s really a great car.

Jerry Seinfeld

Looks like Nic and Peter are either former Fisker employees or Advanced Equities employees.

Bo H

I dont have the same IP address, dont know the other two posters, but they speak for 2000 of us driving this fabulous car around the world, which COULD have been the global EV success story for the US. The car had early issues like all first cars, but now they work and driver better than any car i know.
The press attacks have been outrageous and have indeed been unreasonable – late approvals by government, two unfortunate fires, battery manufacturer going bankrupt, storm killing 336 uninsured cars, and then the government shutting down the loan – who can survive that? Tesla seems to have gotten equal opportunity but many more favors – for a battery-only car that fills a void now, but will never be a realistic alternative to gasoline cars due to range anxiety – and not outside the US. Not that Fisker Automitive didnt make mistakes, but the Atlantic would have been a MUCH bigger success than Tesla, because it would have appealed globally with no battery-only concerns. Henrik designed the best car and the Atlantic could have brought thousands of jobs in the US. Why oh why has the press united to kill of a solid, innovative and absolutely gorgeous EV built with passion in the US? Give Fisker a break!!!

Nicjones

Yes I am biased: I am a customer of Fisker and love my car. Nothing to be ashamed about. But what are your reasons to be biased?

Katie Fehrenbacher

of course I would check before saying that. and funny, you know you can see locations from IP addresses, too. Oh but you’re not biased at all. Just a totally random reader.

Peter E

Are you saying NicJones and John aren’t two different people? Well, even if they are just one person, I agree with what he / they is/are saying. If you want to do some real reporting,
talk to Henrik Fisker himself and get the real scoop. Only he might not want to talk with you — since he’s probably aware of the position you’ve taken against Fisker in the past.

Nicjones

Please go ahead and check Katie instead of again making false allegations. Now you are accusing your own readers!

Ballywho?

I’m just surprised the press and politicians have been so against this American company. The likes of Ford, Nissan, GM and Tesla all have some type of US gov’t help. Why the gloom for great technology and the future of automobilia?

Nicjones

Katie clearly Fisker is not the New Jersey 9/11 as you post in your article. Just because Reuters spoke to a few disgruntled employees? Do you think investors are stupid and do not know what are investing in? When one makes a private investment, specially in an uncomplicated business like Fisker, you make a bet on future. You either have money in the bank or not. You either sold 2,000 cars or not. So Katie please try and not make a mountain out of a witch hunt.

Peter E

Peter E Wednesday, June 19 2013 EDITED

I agree with the two other comments. You are piling on — and looking for cheap headlines implying that Fisker is toast — just as you have been doing for a while now. I’m betting that you — along with a bunch of other pundits who been saying the company is doomed — are all going to look pretty silly when Henrik Fisker and Richard Li resurrect their company, launch the Atlantic, and successfully go public all within a few years.

Peter E

I agree with the two other comments. You are piling on — and looking for cheap headlines implying that Fisker is toast — just as you have been doing for a while now. I’m betting that you — along with a bunch of other pundits who been saying the company is doomed — are all going took pretty silly when Henrik Fisker and Richard Li resurrect their company, launch the Atlantic, and successfully go public all within a few years.

Nichael

Its sad that people DO NOT understand how much work went to this beautiful car, and do not see that a new tech car will have flaws…..the very first fights to moon caught fire before getting started ( no one demanded $$ back from NASA, or Russia ).

I think 600k for the brain that put this car together is not a lot of money. Please take a look at salaries for some other car companies.

Nicjones

Katie please don’t call misrepresentation, your love for tesla and hatred to Fisker, witch hunt REPORTING!

Nicjones

Fisker investors and customers like me should jointly sue Reuters, Jalopnik and all the bogs like Gigaom that are on a witch hunt and have ruined the Fisker brand and caused harm to employees, customers and tax payers. The car is perfect, works beautifully and it’s shocking how blogs have ruined the name. It’s called harassment and defamation Katie.

Katie Fehrenbacher

@Nicjones, Did you actually read the post? I lay out the details of the Reuters story and say if that is indeed true then the next question is was it intentional or not. I’m actually giving Fisker a lot of leeway in describing it that way:

“Essentially the article lays out that for about a year — from the Summer of 2011 to the Summer of 2012 – Fisker’s finances were unraveling, and while the DOE was informed of this, the company’s investors appear to not have been aware of Fisker’s financial problems, at least according to the Reuters report. If you believe that, then the next question is naturally: did Fisker’s executives and board twist the story intentionally to its investors, or unintentionally?”

Katie Fehrenbacher

If you read the article again you would probably see that the salaries and events would not be the reason for suing. That would be if Fisker is accused of lying to its investors.

Nicjones

Katie you are making an assumption. What exactly do you think Fisker lied about? It’s a witch hunt. Why are you so against Fisker?

john

Katie drawing salaries and doing events (to which you go to all the time for auto related PR) is not a reason to sue. GM spends billions of dollars on events and brands like Lincoln are known for their multi million dollar adds during super bowl. If an investor sued Fisker on your article and for a $100K expense for an event, it would be the biggest joke. Department of Energy is a loan provider to companies like a bank. They do not make recommendations to their clients, so your analysis of the Reuters pie in the sky analysis is also faultered. Your rehash of the Reuters story is equally bad if not more. When one invests in venture capital, you do not sue because the company lost its value or you lost the money, or people took salaries or you tried to build a brand. On the contrary, journalists are on a witch hunt, and I see a class action lawsuit against several journalists who ruined the Fisker brand and caused loss of tax payer money!

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