The US Department of Energy (DOE) is trying out a new solution to loans that have flopped – auctioning them off. A $50-million loan previously award to Vehicle Production Group LLC (VPG) through the Advanced Technology Vehicles Manufacturing loan program (ATVMP) has gone unpaid. VPG, a maker of compressed natural gas-powered wheelchair-accessible vans, shut its doors in May after running out of cash.
The DOE is attempting to cut its losses for its failed ATVMP loans, such as the $192 million still owed by Fisker Automotive as the extended range EV carmaker searches for investors. VPG and Fisker have struggled to meet performance targets that were part of their loan agreements. VPG shut down operations right after the DOE froze the company's assets. Whoever buys the loan could press VPG for repayment, or exchange it for equity in the company if it gets back in business.
So far, the online auction bidding doesn't appear to be going so well. If you visit the federal government's auction page, you'll see the VPG auction was scheduled for August 15, 2013, with a deadline for initial bids on August 12. The DOE declined comments to Reuters on the bidding. Politico's Morning Energy editor Alex Guillen contacted the DOE to find out why the auction didn't take place. A DOE spokewoman told Guillen that the "process is still being worked through" without offering any details. Guillen also noticed the DOE states that it does have the right to stop the sale, reject any or all offers, or to enter into an agreement without notice.
So far, the online auction bidding doesn't appear to be going so well.
The idea of offering an auction sale for loans to troubled companies came to the DOE a few months ago. In May, Fisker investors talked to the DOE about buying the loan at a discount to salvage the company. Those discussions prompted the DOE to research the legal ramifications of an auction sale, which were apparently fruitful.