March 06, 2012 11:25
Zingarevich to spend over $50 mln saving Ener1 from bankruptcy
MOSCOW. March 6 (Interfax) - Russian businessman Boris Zingarevich will spend over $50 million in a bid to save Ener1, which produces batteries for hybrid cars, from bankruptcy.
Ener1 said a U.S. bankruptcy court had confirmed a reorganization plan, which clears the way for the company to emerge from its Chapter 11 reorganization by mid-March.
The plan provides for a restructuring of the company's long-term debt and the infusion of up to $86 million of new equity funding, which will support the continued operation of Ener1's subsidiaries.
Bzinfin, a firm controlled by Zingarevich, Ener1's biggest shareholder, will provide the bulk of the fresh capital. Bzinfin will invest $55 million itself, in return for preferred shares, and the rest in conjunction with unspecified partners.
Ener1 liabilities totaling $78 million will be canceled in exchange for ordinary shares issued by the reorganized company. All existing Ener1 shares will be canceled.
Ener1, Inc. is a holding company for several energy storage technology subsidiaries, which develop solutions for applications in the electric utility, transportation and industrial electronics markets.
Ener1's market cap plummeted in 2011 as losses mounted - its share price peaked at $5.9 but sank to a low of $0.03 when it filed for Chapter 11. The slide in the value of the shares gained momentum in August when Ener1 had to restate financial statements for 2010 and Q1 2011, in connection with transactions with Norway's Think Holdings and Think Global. Enr1's 2010 losses were revised from $68.8 million to $165.3 million.
As a result, the same August, the law firm Glancy Binkow & Goldberg brought a class action against Ener1, accusing its management of misstating financial reporting and misleading shareholders.
Zingarevich, the founder and co-owner of the Ilim (RTS: ILIM) group, invested money in the company back in 2002, and as of February his stake - including warrants - stood at 47%. He was not directly involved in Ener1 management before 2010, but he took a seat on the company's board of directors at the end of May 2010.
In order to invest in Ener1, Zinagrevich took a $100 million loan from VTB (RTS: VTBR), providing personal guarantees and stock in the company as collateral.
Ener1 began commercial battery deliveries in May of last year. Think Global was the company's first client. In order to ensure sales and to support a major buyer, Ener1 invested in Think Global in 2009 and now owns around 33% of its stock. Former Russian Deputy Prime Minister Alexei Kudrin became an electric car owner in 2010. But generally speaking, demand for Think Global product in Russia is still extremely low.
Outside the United States, Ener1 has a plant in South Korea it acquired in 2008, and is also represented in Europe.
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