From Ed Morrissey:
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.
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 with 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.
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.