Business

‘Green’ car maker Fisker fires 75pc of workforce

April 06, 2013

The Fisker automotive electric Atlantic sedan logo is seen during its unveiling ahead of the 2012 International Auto Show in New York April 3, 2012 file photo. — Reuters picThe Fisker automotive electric Atlantic sedan logo is seen during its unveiling ahead of the 2012 International Auto Show in New York April 3, 2012 file photo. — Reuters picDETROIT, April 6 — Fisker Automotive, the struggling government-backed hybrid sports car maker, yesterday terminated most of its rank-and-file employees in what sources said was a last-ditch effort to conserve cash and stave off a potential bankruptcy filing.

Fisker, which raised US$1.2 billion (RM3.6 billion) from investors and tapped nearly US$200 million in government loans, has “at least” US$30 million in cash on hand, according to a source familiar with the company’s finances.

The company’s flagship vehicle, the US$100,000-plus Karma plug-in hybrid, quickly won accolades for its styling and cachet with celebrities, including pop star Justin Bieber and actor Leonardo DiCaprio, who is also an investor in the company.

About 160 workers were fired at a Friday morning meeting at Fisker’s Anaheim, California, headquarters, according to a source who attended the meeting. They were told that the company could not afford to give them severance payments.

Fisker confirmed in a statement that it let go about 75 per cent of its workforce but did not specify the number of workers affected. It called the move “a necessary strategic step in our efforts to maximise the value of Fisker’s core assets.”

“Unfortunately we have reached a point where a significant reduction in our workforce has become necessary,” Fisker said, adding that it was still searching for a strategic partner.

The mass termination triggered a lawsuit seeking class-action status from angry former employees. A lawyer for the fired employees said he expects the company to file for bankruptcy “sooner rather than later.”

A Fisker representative could not immediately answer questions on the company’s financial position. In the past, the automaker has declined to comment on the possibility of a bankruptcy restructuring.

The layoffs, which hit departments including engineering, public relations and marketing, are the latest symptom of Fisker’s cash crunch. In late March, Fisker put its entire US workforce on furlough. It also hired law firm Kirkland & Ellis to advise on a possible bankruptcy filing.

Fisker asked 53 senior managers and executives to stay on board, primarily to pursue buyers for the company’s assets, according to the source who attended yesterday’s meeting in Anaheim. The remaining Fisker executives also are continuing negotiations with the US Department of Energy.

Yesterday’s class action is one of several challenges Fisker has faced over the past month. In March, company founder Henrik Fisker abruptly resigned, citing “several major disagreements” with top management.

Fisker has not produced a car since July and has been seeking a financial backer to help finish the development of the Atlantic and produce it at a Delaware plant. — Reuters

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