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Clouds in the Californian Sun

Dark clouds are gathering over Californian electric car maker, Fisker, with news that it has paid off around 75% of its workforce. The troubled company which manufactures luxury hybrid sports cars was founded in 2007 and has raised $1.2 billion from investors and $200 million in government loans. The redundancies totalled 160 employees and were focused on ordinary workers rather than senior management.

Dark clouds are gathering over Californian electric car maker, Fisker, with news that it has paid off around 75% of its workforce. The troubled company which manufactures luxury hybrid sports cars was founded in 2007 and has raised $1.2 billion from investors and $200 million in government loans. The redundancies totalled 160 employees and were focused on ordinary workers rather than senior management. Around 53 senior managers and executives have been retained by the company as it seeks buyers for the company's assets. The move is seen as a final attempt by the company to avoid bankruptcy by conserving cash. In a statement, the company said that the move was a "necessary strategic step in our efforts to maximize the value of Fisker's core assets." The company is thought to have around $30 million in cash remaining in its accounts. That money could soon be bolstered by $15 million after a successful claim against bankrupt battery provider, A123 Systems.

The 160 employees were let go at a meeting on Friday 5th April at Fisker's headquarters in Anaheim, California. Workers were told that they would not be receiving severance payments as the company could not afford them. As well as searching for a buyer for the company's assets, the remaining 53 managers will continue to attempt to renegotiate the terms of a $10 million US government loan that falls due on April 22nd. Leading up to the redundancies, Fisker retained specialist law firm Kirkland & Ellis last week to advise on a potential bankruptcy filing. Fisker makes the high-end 'Karma' plug-in hybrid which sells for $100,000. The company though has not made a car since July last year and has been looking for financial backers to help produce a second 'Atlantic' model.

The last month has been an exceptionally difficult time for the company, with founder Henrik Fisker resigning after reported 'major disagreements' with other company officers. Efforts to find a backer in China also came to nothing after talks with the Dongfeng Motor Group and Zhejiang Geely Holding Group ended when both companies expressed concerns about the terms of Fisker's US government loans. The Karma originally received favourable reviews and celebrity backing from the likes of Leonardo DiCaprio and Justin Bieber but the US government froze an original $529 million loan on the back of delays launching the car. After all efforts to find a substantial backer seem to have failed, Fisker now appears willing to sell off anything that can be salvaged from the company, including the intellectual property rights for its technology.
 

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