Fisker Seeks Approval to Sell Electric SUVs

Fisker's Distressed Sale of Ocean SUVs to Impact Creditors

Fisker, a troubled electric vehicle company, is in the process of obtaining approval from the Delaware Bankruptcy Court to sell its remaining inventory of all-electric Ocean SUVs to a New York-based leasing company, American Lease. The deal, valued at $46.25 million, involves selling 3,231 vehicles at a significant discount of approximately $14,000 per vehicle, compared to their original prices of about $70,000. This move is critical for Fisker as it aims to generate funds swiftly to cover essential expenses such as payroll. However, the sale has raised concerns among unsecured lenders who fear that they may not receive any proceeds from the sale, considering Fisker's existing debt of around $1 billion to its unsecured creditors.

The leasing company, American Lease, primarily serves ride-hail drivers in New York City, aligning with the city’s regulatory requirement for zero-emission fleets by 2030. Fisker's largest secured creditor, Heights Capital Management, has supported the sale, despite it only partially repaying the nearly $190 million owed by Fisker. The deal with American Lease also includes a provision that the vehicles cannot be resold for 12 months and will be sold "as is" without any warranties. Additionally, Fisker's CEO and co-founder, Henrik Fisker, and other top executives are still on the payroll, with their salaries undergoing modifications. The company is also wrestling with unresolved issues like open recalls and a problem with the water pumps on the Ocean models.

A new hearing is scheduled for July 11 to address the concerns of the unsecured creditors and the U.S. Trustee’s office, which is apprehensive about the pace of the sale process. The outcome of this sale could significantly impact Fisker's future, potentially leading to a Chapter 7 liquidation if not managed properly.

Key Takeaways

• Fisker is seeking approval to sell 3,231 Ocean EVs to a NY leasing company for $46.25M at $14,000 per vehicle, significantly lower than the original $70,000 starting price.
• Unsecured creditors are worried about not receiving any proceeds, as Fisker owes $1 billion to them.
• American Lease plans to serve NYC ride-hail drivers, required to be zero-emission by 2030.
• The outcome of the sale could significantly impact Fisker's future, potentially leading to a Chapter 7 liquidation if not managed properly.### AnalysisFisker's distressed sale of Ocean SUVs to American Lease impacts unsecured creditors and Heights Capital Management, potentially delaying their repayment. This move, driven by urgent financial needs, risks Fisker's future, possibly leading to liquidation. Short-term, Fisker gains liquidity, but long-term viability is uncertain, influenced by market response and creditor negotiations.### Did You Know?
  • Fisker's Sale Terms and Impact on Creditors:
  • Fisker is looking to sell its inventory at a significant discount of approximately $14,000 per vehicle, much lower than the original price of around $70,000. This discount sale aims to generate quick funds to cover essential expenses like payroll.
  • The sale includes a provision that the vehicles cannot be resold for 12 months and are sold "as is" without any warranties, potentially affecting the post-sale market value and usability of the vehicles.
  • The deal has raised concerns among unsecured creditors who fear they might not receive any proceeds from the sale, as Fisker currently owes around $1 billion to them.
• Zero-Emission Fleet Requirements in New York City:
  • New York City has mandated that fleets, especially those used for ride-hailing services, must be zero-emission by 2030, driving demand for electric vehicles among leasing companies like American Lease.
  • The acquisition of Fisker's Ocean SUVs by American Lease aligns with this mandate, indicating a strategic move to comply with environmental regulations and tap into a growing market segment focused on sustainable transportation.
• Fisker's Operational Challenges and Future Outlook:
  • Fisker is currently grappling with unresolved issues like open recalls and a problem with the water pumps on the Ocean models, which could impact its reputation and market perception.
  • The outcome of the sale to American Lease could significantly impact Fisker's future, potentially leading to a Chapter 7 liquidation if not managed properly, highlighting the critical juncture at which the company finds itself.