Another Obama Administration "<span style="color: #008000;">green</span>" investment goes bankrupt.

From Ed Morrissey:

Another green-tech stimulus recipient files for bankruptcy

posted at 3:40 pm on January 26, 2012 by Ed Morrissey

In last year’s State of the Union speech, Barack Obama hailed the great investment he made with taxpayer dollars in the manufacturer of advanced solar panels, only to have Solyndra go down the tubes — taking more than a half-billion dollars in taxpayer money with it.  In this year’s SOTU speech, Obama bragged about having sunk money into “partnership” with the private sector to become a world leader in car-battery sector.  Right on time, that “partner” filed for bankruptcy, too:

An Indiana-based energy storage company that received a $118.5 million stimulus-law grant from the Energy Department filed for bankruptcy Thursday.

Ener1 is asking a federal bankruptcy court in New York to approve a plan to restructure the company’s debt and infuse $81 million in equity funding. …

The Energy Department, in 2009, approved a $118.5 million stimulus-law grant for EnerDel, a subsidiary of the company that develops lithium-ion batteries used in electric vehicles. The grant was part of a broader program aimed at promoting the development of electric-vehicle battery technology.

President Obama touted the program in his State of the Union address this year.

“In three years, our partnership with the private sector has already positioned America to be the world’s leading manufacturer of high-tech batteries,” he said.

We saw this coming last October, when CBS first reported on Ener1′s shaky financial position.  At that time, the company had spent $53 million of the grant and had pledged to create 1700 jobs from it in total.  When the story got reported, Ener1 traded at 11 cents a share, down from its December 2008 peak of $9.40 and the $3 per share price when the Department of Energy decided to invest in a company that had lost two-thirds of its value.  The share price was five cents by the beginning of this month, and is now at two cents a share.

Don’t forget, too, that the $53 million spent by October created jobs … 33 of them.

Perhaps green-tech stimulus recipients should call on Obama to refrain from giving them SOTU shout-outs.

And what does the Obama Administration say? Jen Stutsman, spokesman for the Energy Department, said:

The Department of Energy's grant to EnerDel is supporting a cutting-edge battery manufacturing plant that is producing batteries in America that are being sold across the country and around the world. This grant is part of the department's efforts to commercialize promising vehicle technologies that will help America to reduce our dependence on foreign oil and ensure U.S. companies can compete in the global auto industry. While it's unfortunate that Ener1, the parent company, has entered a restructuring process, the new infusion of $80 million in private capital demonstrates that the technology has merit. As the company has said, the restructuring is not expected to impact EnerDel's operations and they do not expect to reduce employment at the site.

NASDAQ delisted Ener1's stock (HEVV) last October:

Earlier this week, Ener1 was notified by the NASDAQ Stock Market LLC that it has not complied with the exchange’s filing requirement for continued inclusion in Listing Rules 5250(c)(1). The rule requires the timely filing of period financial reports wi

th the SEC. The company failed to file its form 10-Q for the three-month period ended June 30, 2011, on a timely basis, violating the rules set by NASDAQ.

And there's even more:

According to the SEC filing, Ener1 failed to meet an Oct. 17 deadline to file a quarterly report for the period ended June 30. In addition, the company said NASDAQ determined that Ener1 violated shareholder approval requirements in amending a line of credit.

Ener1 already was in danger of losing its NASDAQ listing because its stock price has not met the $1-per-share minimum price requirement to trade on the exchange since July. NASDAQ warned the company in September that it was not meeting listing requirements.

Ener1’s shares tumbled from more than $4 a share in January, when Vice President Joe Biden visited EnerDel’s Greenfield battery plant, to less than a dollar in a matter of months. Shares traded at 20 cents each Wednesday morning, down 6 cents since Tuesday’s close.

The company has experienced a series of setbacks this year. Most recently, several lawsuits have been filed, claiming the company misled investors about its financial condition.

Investors began filing the suits in August, days after Ener1 said it would restate earnings for 2010 and for the first quarter of this year. Ener1’s 2010 financial loss of $69 million eventually was restated to a loss of $165 million.

And, to top it all off, the company has even applied for $290 million in federal loan guarantees.

So, what do we have? A company that the Obama Administration thought should get a grant, because they were in an approved kind of business, that failed to make legally required filings with the Securities and Exchange Commission, and which allegedly misled its shareholders about its financial condition. How is it that the regulation-and-oversight-happy Obama Administration could give Ener1 a $118.5 million grant yet somehow fail to monitor what was going on with the company?1

EnerDel develops lithium-ion batteries used in electric vehicles, something the Obama Administration really, really likes. But, as THE FIRST STREET JOURNAL has reported previously, General Motors' Chevrolet Volt has not been selling very well, and in the United Kingdom there are actually more public electric car charging stations than there are electric cars on the road. The Obama Administration, for political reasons, invested over a hundred million in taxpayer dollars in a company which couldn't pay its bills, wouldn't meet its legal requirements, and possibly misled investors, because it was in the business of developing batteries for cars that nobody wants to buy.

This is the kind of thing that happens when the government gets involved in picking winners and losers, based on what kind of business proposals the companies can make: some are going to turn out OK, and others are going to turn out bad. And that's why the government shouldn't be involved in this kind of thing at all: if Ener1 had been a good business investment, it shouldn't have needed the $118.5 million grant, but would have attracted that kind of investment from the private sector.

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13 Comments

  1. Let’s see, Vice President Biden visited EnerDel’s Greenfield plant last January, when the share price was more than $4.00 a share (the 52 week high was $4.19 per share) and today’s closing price was 2.6¢ per share. In other words, the stock has lost 99.3% of its value.

    However, penny stock investors seem to think they can make some money here: 19.48 million shares were traded today , 11.5% of the total shares outstanding (169,092,179). Just $1,000 can buy you 38,461 shares.

  2. Perhaps MSM’s vaunted watchdogs of democracy will get off their knees long enough to look into recent political activity by executives of EnerDel and Ener1, specifically to determine if they’ve been making substantial campaign contributions to Barack Obama.

  3. Editor, I’ll acknowledge (accurate) sarcasm with reference to MSM’s worshipful position of abject homage to their false god, but the balance of my comment was informed speculation based on a well established pattern of influence peddling unfortunately all too characteristic of Barack Obama’s self-serving economic policies.

  4. Editor says:
    January 26, 2012 at 22:16

    Let’s see, Vice President Biden visited EnerDel’s Greenfield plant last January, when the share price was more than $4.00 a share (the 52 week high was $4.19 per share) and today’s closing price was 2.6¢ per share. In other words, the stock has lost 99.3% of its value.

    However, penny stock investors seem to think they can make some money here: 19.48 million shares were traded today , 11.5% of the total shares outstanding (169,092,179). Just $1,000 can buy you 38,461 shares.”

    Ford at a buck sixty was a better bet. Not merely because the company was more likely to survive despite a panic sell off of the stock dropping the price to incredible lows, nor because it seemed likely that one American auto company would survive to provide a proven and critically needed domestic technology, but because despite significant family ownership there was heavy news coverage of the company and its prospects.

    These Green company examples provide no rational basis for making a judgment as to their feasibility. Upon what is their future success contingent?: A market need yearning to be satisfied? More government guarantees and investments which are administration contingent? And it doesn’t seem as though the mainstream media is interested in unpacking the details.

    I would think (sarcasm) that we would have bright-eyed reporters laboring at the behest of their editors to fly-speck every known detail of the manufacturing and sales operations of these companies, and the disbursement of funds, and providing us with detailed reports on just exactly what the finances were at the point of bankruptcy; and, what tangible assets were left.

    This subject begs for a thorough investigative report. Perhaps bloggers will be able to do a systematic and in depth, rather than superficial and impressionistic, job.

  5. ropelight says:
    January 27, 2012 at 08:27

    Perhaps MSM’s vaunted watchdogs of democracy will get off their knees long enough to look into recent political activity by executives of EnerDel and Ener1, specifically to determine if they’ve been making substantial campaign contributions to Barack Obama.

    I should have read to your comment before bothering to make my own.

  6. Everywhere BO has some influence in an area he is totally ignorant, it collapses. The USA downgraded, IL downgraded, Solyndra bankrupt, a few others and these. Common Denominator? BO!

  7. I know eventually we will need to switch to alternative fuels. But like everything on this earth it needs someone or many to investigate it, try it out, fine tune it, make it feasible, do a sales job to convince, stand behind the product, make it for the masses, then operate it. The way BO has gone about this, he wants the first step, then skip to the last step. All one needs to do is look at auto industry. At first it was a toy for the rich, then after Henry Ford tinkered arout with it, he made what was built for the rich, into an affordable, but basic item for the masses. Since then, improvements have been made. And the switch that Henry Ford made was NOT MANDATED BY THE GOVERNMENT to work in weeks, but years.

  8. “I know eventually we will need to switch to alternative fuels. But like everything on this earth it needs someone or many to investigate it, try it out, fine tune it, make it feasible, do a sales job to convince, stand behind the product, make it for the masses, then operate it.”

    —-
    How China dominates solar power

    Huge loans from the Chinese Development Bank are helping Chinese solar companies push American solar firms out of the market

    Armed with tens of billions in loans from the Chinese government, Chinese solar companies have scaled at a rate unthinkable only a few years ago. At the end of this year, there will likely be 50,000 megawatts (MW) of manufacturing capacity in place around the world, with much of that new capacity being developed in China and other Asian countries. (In the year 2000, there were only 100 MW of production capacity worldwide.)

    In four years, the solar manufacturing sector shifted from being led by a geographically dispersed number of companies to one dominated by Chinese companies. In 2006, there were two companies from China in the list of top ten cell producers. In 2010, there were six, according to Bloomberg New Energy Finance. There are currently only two non-Asian manufacturers in the top ten, and those companies — First Solar and Q-Cells — have shifted a lot of their production to Asia.

    So what happened? How did the Chinese come to completely dominate the solar industry in such a short period of time?
    —-

    http://www.guardian.co.uk/environment/2011/sep/12/how-china-dominates-solar-power

  9. Anna Nova:
    In four years, the solar manufacturing sector shifted from being led by a geographically dispersed number of companies to one dominated by Chinese companies. In 2006, there were two companies from China in the list of top ten cell producers. In 2010, there were six, according to Bloomberg New Energy Finance. There are currently only two non-Asian manufacturers in the top ten, and those companies — First Solar and Q-Cells — have shifted a lot of their production to Asia.

    You can get to be #1 in manufacturing using the Apple Method as described by the London Mail Online:

    ‘Forced to stand for 24 hours, suicide nets, toxin exposure and explosions’:
    Inside the Chinese factories making iPads for Apple
    ‘Working excessive overtime without a single day off during the week’
    ‘Living together in crowded dorms and exposure to dangerous chemicals’
    Two explosions in 2011 in China ‘due to aluminum dust’ killed four workers
    Almost 140 injured after using toxin in factory, reports New York Times

    Read more: http://www.dailymail.co.uk/news/article-2092277/Apple-Poor-working-conditions-inside-Chinese-factories-making-iPads.html#ixzz1kneHVNg8

    It’s hard to compete against virtual slave labor.

  10. Of course, there is another aspect to that command economy. From The Washington Post:

    By William Wan, Published: January 18

    A best-selling Chinese author released one of his most scathing and personal works Wednesday: a nine-page statement detailing his alleged torture by Chinese officials and his decision to flee to the United States with his wife and young son.

    In his first extensive public comments since leaving China last week, prominent Christian dissident Yu Jie, 38, described his friendship and work with imprisoned Nobel Peace Prize winner Liu Xiaobo, his family’s experience under house arrest and his severe beatings in late 2010 by officers who he said identified themselves as state security agents.

    “When I lost my freedom to write totally, when personal safety could not be guaranteed, and after persisting for 14 years as an intellectual in China speaking the truth, I was forced to make the decision to leave China,” Yu said in the statement.

    His comments and arrival in Washington come at a sensitive time for U.S.-China relations.

    Xi Jinping, who has been tapped to be China’s next leader, is expected to visit the United States in the coming weeks. It is unclear how strongly U.S. officials will push him on the subject of human rights — long a sore point in relations between the two nations.

    More at the link. But Mr Yu is actually one of the lucky ones: he was able to get out of that workers’ paradise. Nobel Peace Prize winner Liu Xiaobo is in prison, his wife is under virtual house arrest, and China began a heavier crackdown on dissidents in 2010.

    Yeah, I guess when industries are ordered to use solar panels, by a government with the authority to issue such orders, and a secret police force which is perfectly willing and able to enforce such orders, you can build a solar panel industry not subject to market forces. Most free people don’t particularly think that is a good thing.

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