EnerDel battery firm that won DOE grant files for bankruptcy

Washington — A New York-based battery company that won a $118 million federal grant filed for bankruptcy protection Thursday — as scrutiny in Congress over the Obama administration's green investments has grown.

Ener1 Inc. said it had reached a deal on a restructuring plan that will significantly reduce its debt and provide up to $81 million to recapitalize the company. The company filed for bankruptcy in U.S. Bankruptcy Court in New York and hopes to exit within 45 days.

In January 2011, Vice President Joe Biden toured Ener1 in Greenfield, Ind. The company's wholly owned EnerDel subsidiary won a $118 million Energy Department grant in August 2009 to produce electric batteries for Think models and a Volvo electric vehicle.

Energy Department officials insist the program is still on track and the company will continue to operate, and no employees are expected to lose their jobs.

"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." said Jen Stutsman, spokesperson for the Energy Department. "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 "

To date, the company has spent $55 million of the $118.5 million grant.

The company has received support from Republicans as well. The Bush administration awarded Ener1 $10 million in grants, and Indiana Gov. Mitch Daniels awarded EnerDel $7.1 million in tax credits. Energy officials say the project is moving forward on schedule and on budget, and is being closely monitored by the Energy Department.

In addition to the restructuring of long-term debt, Ener1's general creditors will be unimpaired and paid by the company under the restructuring plan. All of the company's existing common stock will be canceled, the long-term debt holders will be receiving a combination of cash, a new term loan and new common stock in exchange for their claims, and new preferred stock will be issued to the provider of the post-petition and exit funding.

"This was a difficult, but necessary, decision for our company. We are extremely pleased to have the strong support of our primary investors and lenders to substantially reduce the company's debt," said Ener1 CEO Alex Sorokin. "Their support demonstrates that our business partners have an appreciation for our future business opportunities in providing energy storage solutions for electric grid, transportation and industrial applications. We expect the new funding to provide ample liquidity for our subsidiaries to meet their ongoing obligations to employees, customers and suppliers."

Ener1 was hurt when a major customer, Think Global, filed for bankruptcy in June 2011, and for which it was exclusively providing commercial lithium-ion battery packs. Ener1 was delisted from Nasdaq in December.

Biden toured the 200,000 square-foot-factory in January 2011, shaking hands with workers. In 2011, Ener1 had 350 workers in Indiana and 80 at the battery pack assembly plant.

"We can out-work, we can out-hustle, we out-think anyone on the planet. It's just a fact. You can never go wrong betting on the American people," Biden said in January 2011. "It's time to get back up and apply all of our innovation."

The government awarded $2.4 billion in grants to make batteries and electric vehicle components in August 2009 as part of President Obama's push to electrify the fleet. In 2008, he called for getting 1 million electric vehicles on the roads by 2015.

Obama repeated that pledge in his 2011 State of the Union address; he didn't mention it in this week's State of the Union.

At the 2011 event, Biden looked at a Think vehicle. Its then CEO, Charles Gassenheimer, thanked the federal government for making the factory possible with its subsidy.

dshepardson@detnews.com

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