“The company, Ener1, received a $118 million grant from DOE [Department of Energy] in 2010 as part of the president’s stimulus package,” writes the Heritage Foundation’s Lachlan Markay. “The money, which went to Ener1 subsidiary EnerDel, aimed to promote renewable energy storage battery technology for electrical grid use.”
Today, Ener1 announced it was filing for Chapter 11 bankruptcy.
Despite the generous federal support Ener1 received (Vice President Biden even visited Ener1, January 26, 2011, the day after the President pledged in his State of the Union address to put “one million advanced technology vehicles on the road by 2015” with the help of taxpayer funding), and like several other now-bankrupt energy companies, Ener1 was “racked by problems.”
See the Vice President mistakenly, but appropriately, refer to the bankrupt company as “Enron one”:
“In October, NASDAQ delisted the company due to non-compliance with Securities and Exchange Commission filing requirements. A month later, the company’s president, chief executive, and top financial officer were fired,” Markay writes.
Here’s what the company had to say about Thursday’s news:
Ener1, Inc. (OTC: HEVV) (the “Company”) today announced that it has reached agreement with its primary investors and lenders on a restructuring plan that will significantly reduce its debt and provide up to $81 million to recapitalize the Company to support its long-term business objectives and strategic plan.
To implement this restructuring plan, the Company has voluntarily initiated a “pre-packaged” Chapter 11 case in U.S. Bankruptcy Court in the Southern District of New York, in which it is requesting that the Court confirm a pre-packaged Plan of Reorganization to implement the restructuring. The Company filed a proposed Disclosure Statement and Plan of Reorganization with the Court and anticipates completing the restructuring process in approximately 45 days…
The pre-packaged restructuring plan, which has been unanimously accepted by all of Ener1′s impaired creditors, provides for a restructuring of the Company’s long-term debt and the infusion of up to $81 million of equity funding, which will support the continued operation of Ener1′s subsidiaries and help ensure that the restructuring will not adversely impact their employees, customers and suppliers. Of this amount, a new debtor-in-possession (DIP) credit facility of up to $20 million will be available upon Court approval to support working capital needs during the restructuring. The balance, for a total of up to $81 million, will be available over the four years following Court approval of the restructuring plan and subject to the satisfaction of certain terms and conditions.
As mentioned in the above, Ener1 is not the first government-funded “green energy” initiative to go bankrupt. In fact, Ener1 isn’t even the first government-sponsored energy storage technology company to go bankrupt.
Beacon Power beat them to the punch.
“Beacon Power, which manufactures flywheel energy storage technology, received a $43 million loan guarantee from the same stimulus program that funded Solyndra [emphasis added],” Markay writes. “Despite having used $3 million marked for loan repayment to continue funding its daily operations, Beacon filed for Chapter 11 in November.”
And as if this didn’t seem bad enough, on the very same day Ener1 files for Chapter 11, the Obama administration announces more “clean energy” loan guarantee.
“Agriculture Secretary Tom Vilsack today announced his second bio-fuels loan guarantee in a week, revealing that the Agriculture Department (USDA) is slated to loan an Oregon biorefinery $232.5 million for a project expected to create 65 jobs and support 38 others [emphasis added],” The Washington Examiner’s Joel Gehrke writes.
“This project and others like it will help to establish a domestic advanced biofuels industry that will create jobs here at home and open new markets in the Pacific Northwest and across America,” Vilsack said in a statement.
So, what’s the reasoning behind this loan guarantee?
“USDA offered the loan guarantee as an example of President Obama fighting global warming while increasing energy security and helping the rural economy,” Gehrke writes.
The agreement announced today is similar to a $25 million loan guarantee USDA approved last week for an Iowa project “expected” to create 38 jobs.