The company, Ener1, received a $118 million grant from DOE in 2010 as part of the president’s stimulus package. The money, which went to Ener1 subsidiary EnerDel, aimed to promote renewable energy storage battery technology for electrical grid use.
But despite generous federal support for the company, Ener1 was racked by problems last year. 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.
On Thursday, Ener1 announced it will initiate a pre-packaged Chapter 11 bankruptcy plan as part of an agreement to restructure the company’s debt obligations.
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.
Ener1 is not the first energy storage technology company to file for Chapter 11 after receiving significant stimulus support. Beacon Power, which manufactures flywheel energy storage technology, received a $43 million loan guarantee from the same stimulus program that funded Solyndra. Despite having used $3 million marked for loan repayment to continue funding its daily operations, Beacon filed for Chapter 11 in November.
UPDATE: Vice President Biden lauded Ener1 as a stimulus success one year ago – to the day. The stimulus was, Biden claimed, “not just creating new jobs, but sparking whole new industries that will ensure our competitiveness for decades to come — industries like electric vehicle manufacturing.” He went on to single out Ener1 specifically.