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  • After Massive Losses, Stimulus-Backed Company Asks for More Taxpayer Cash

    A financially troubled green energy company has seen its stock prices plummet to below a dollar per share (UPDATE: see below) since receiving a nearly $250 million federal grant in 2009. The company lost $257.7 million last year. Two of its clients make up half of its business, and one is also struggling financially.

    But none of that has stopped A123 Systems, which manufactures batteries for electric vehicles, from applying for another $233 million in federal backing through the Energy Department’s Advanced Technology Vehicle Manufacturing program, according to its latest filing with the Securities and Exchange Commission.

    “We have made a loan application under the Advanced Technology Vehicles Manufacturing Loan Program, or the ATVM Program, to support our continued manufacturing expansion,” A123 said in the SEC filing. “Based on the amount of our grant award under the DOE Battery Initiative and the guidelines associated with the ATVM Program, we believe we will be permitted to borrow up to $233 million under the ATVM Program.”

    It is not clear that the Energy Department will approve the request. The rule establishing the ATVM program dictates that loan recipients must be “financially viable without the receipt of additional Federal funding associated with the proposed project.”

    Whether A123 meets that qualification is questionable. “Much of our planned domestic manufacturing capacity expansion depends on receipt of these funds [from the ATVM program] and other incentives,” the company stated in its SEC filing, “and the failure to obtain these funds or other incentives could materially and adversely affect our ability to expand our manufacturing capacity and meet planned production levels.”

    The Energy Department did not return multiple requests for comment on A123’s loan application. [UPDATE: In an email Friday afternoon, DOE spokesman Bill Gibbons said that the Department could not comment on pending loan applications.]

    Even if the company is eligible for the loan, however, it is in dire financial straits, and may be a shaky bet for an administration already plagued by a series of Solyndra-esque green energy flops.

    According to its SEC filing, A123 is relying not only on further federal funding, but on its two largest clients, which together account for half of its business. One of those companies, Fisker Automotive, is also financially troubled.

    “For the year ended December 31, 2011,” its filing states, “revenue from our two largest customers, Fisker and AES Energy Storage, LLC and its affiliates, or AES, represented 26% and 24% of our revenue, respectively.”

    Fisker, which received a $529 million loan through the ATVM program despite conducting significant portions of its operations in Finland, delayed production of one of its models, and was forced to lay off 65 employees. A pair of U.S. senators is investigating DOE’s decision to award its Fisker loan.

    The 26 percent of A123’s revenue coming from its relationship with Fisker increased by 1,300% percent since 2010. “If Fisker is unable to fulfill its commitment under the supply agreement,” A123 states, “our revenues could be materially lower than our forecasts and we may have under-utilized manufacturing capacity.”

    A123 even cites a shortfall in orders from Fisker as a cause of its declining financial health in 2011. “In November 2011 and again in January 2012, we announced revised annual revenue guidance for 2011 due to an unanticipated reduction in orders from Fisker for the fourth quarter,” the SEC filing states.

    Ali Meyer contributed to this report.

    (UPDATE: A123 shares rose above a dollar on the news that the company would be awarded a sizable Army contract. Developing…)

    Posted in Featured, Ongoing Priorities, Scribe [slideshow_deploy]

    13 Responses to After Massive Losses, Stimulus-Backed Company Asks for More Taxpayer Cash

    1. KJinAZ says:

      This is what investment banking used to do before the collapse. Now it seems the Whitehouse is the biggest investment bank in the world. The sad part is, unlike investment banks, they give away grants more than loans it seems. They also don't seem to know how to read balance sheets as is the case with all the failed loans they made. We must take Washingtons purse strings away before they destroy what's left of America.

    2. afpclack says:

      Once again- the US taxpayer is being forced to underwrite an "enterprise" deemed "special" by the politically correct crowd.. even though that company has proven to be incapable of organizing itself to build/create any product or service for the marketplace that would enable it to become a self "sustainable" enterprise, even after enormous taxpayer funded subsidies. Is this scheme available to anyone, or does it require contributions to campaigns? Anything else required?It appears to me that it is the merger of business and government.. described as fascism in the old days. What is this "arrangement" called in this, the "enlightened" era of institutional crony corruption?

      fascism: a political philosophy, movement, or regime (as that of the Fascisti) that exalts nation and often race above the individual and that stands for a centralized autocratic government headed by a dictatorial leader, severe economic and social regimentation, and forcible suppression of opposition

    3. Mike says:

      Let me help you out here. If YOU cannot figure out how to run your company "in the black", fail! Just fall down, turn up your toes and freaking die as a company! Someone else will swoop in and buy up your equipment and start running a company that can remain solvent. You are not "too big to fail". Our government is proof of that. Look how big it has become and it fails EVERY SINGLE DAY! Sink or swim, but come on in; the water's fine!

    4. Wooz says:

      Hmmm….Now they've received a sizable Army contract. Who orchestrated that deal?

    5. why have the americans started throwing good money after bad?

    6. Blair Franconia, NH says:

      No, means no.

    7. Mike, Wichita Falls says:

      Didn't Dodd-Frank mean the end of "too big to fail"?

      Repeal Dodd-Frank & DOE.

    8. Bobbie says:

      If it helps in the destruction of America, Obama is all for it! Getting rid of the word "accountability" pertaining to his discriminating interests and laying the costs of suffering consequences he protects the rightful accountable from on taxpayers instead of letting the accountable suffer their own consequences. Get rid of public, private partnerships! It's abhorrently wrong!

    9. NewcastleWill says:

      political paybacks are driving our nation to bankruptcy. that is all this administration is good at. they give one of their largest bundlers the ambassadorship to the Netherlands last week. the most corrupt administration in the history of this nation. Taft was a kindergartner compared to Barack.

    10. Lloyd Scallan says:

      Why not add ENER1 that Biden made a point to tout as the future? Not only did this company fail, despite "stimulus" money, it was given military contracts to help it survive. When that didn't work, it was sold to a Russian company with all the military technology with it. Another great success by the Obama/Biden team.

    11. Stirling says:

      It's really time for Government's Financial Cord to be Cut. Government makes the word "Business" a Bad word, since they FAIL at everything they throw money at.

    12. zenga says:

      does anybody really believe that obama won't find a reason to give A123 more money if he wants to? and he'd throw it in the face of the American public if he did. about the only thing that could prevent him from doing so is articles like this (a LOT of articles like this one). he'll probably use Fisker as the excuse (all the more to throw it in our face).

    13. RennyG says:

      Oh come on now, why create new committies and studies, just give them the money because they need it and it helps pay for "votes!!!" You commen people don't understand what I am doing. I have an "Alinsky Theory" that I am wanting to acheive, and I will do it!!! Besides, it isn't that much money so I am going to give it to them.
      "Obama has spoken!!!"

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