New York, New York – Lithium-ion battery technology company Ener1 has filed for bankruptcy protection, citing an electric vehicle market that was slower than expected. The company has reached an agreement on a restructuring plan that will significantly reduce its debt and provide up to US$81 million to recapitalize the company, which is not expected to close its battery plant in Indianapolis.
Ener1 had received a Department of Energy government grant for $118.5 million in 2009 to develop batteries for Volvo and electric car company Think, along with $11.1 million in other government funding and tax credits. Think stopped accepting battery shipments in early 2011 as it tried to deal with a backlog of unsold cars, and filed for bankruptcy in June 2011. With the loss of this customer, Ener1 obtained $4.5 million in short-term debt financing from its largest shareholder in November 2011 to continue its operations while it worked to reorganize itself.
Ener1 has manufacturing facilities in the U.S. and Korea, and also develops commercial fuel cell products and nanotechnology-based materials. The company said that the restructuring plan provides for the continued normal operation of its subsidiaries, including EnerDel, EnerFuel, NanoEner, Emerging Power and Ener1Korea, all of which will honour their customer commitments and will continue to pay their suppliers. Ener1 also said that no jobs are expected to be cut as a direct result of the filing, but that it will “continue to monitor market conditions and make adjustments to the workforce as appropriate.”
“This was a difficult but necessary decision for our company,” said Ener1 CEO Alex Sorokin. “We are extremely pleased to have the strong support of our primary investors and lenders to substantially reduce the company’s debt. We moved aggressively to reduce costs and shift focus when the marketplace did not evolve as quickly as anticipated. Our business plan was impacted when demand for lithium-ion batteries slowed due to lower than expected adoption for electric passenger vehicles. That pressure was exacerbated by volatility in the debt and equity markets that further limited our borrowing ability and the loss of a major customer, Think Global, which filed for bankruptcy in June 2011, and for which we were exclusively providing commercial lithium-ion battery packs.”