It’s hard enough when two companies part company on good terms, but when one side of the business relationship leaves the other with a total of $105 million in unpaid bills things are going to get a little tough. 

That’s exactly what has happened to publicly-traded New York-based battery firm Ener1 [NASDAQ:HEV] as it deals with the financial consequences of being both an investor in, and supplier to, bankrupt Norwegian electric automaker Think. 

Ener1 has been around for many years, developing electric car batteries and alternative fuel solutions for a variety of clients, including Nissan, the U.S. Army, General Motors, Ford and Volvo to name just a few - but it is the four-year involvement with Think which now threatens its future. 

In a statement which accompanied a regulatory filing made yesterday, the firms bosses stated that it was “in the process of determining whether the company has sufficient liquidity to fund its operations”. 

The regulatory filing stated a $165.3 million loss for the previous financial year, and a three-month loss from the start of this year of $20.5 million. 

Charles Gassenheimer, Ener1 CEO, at Volvo

Charles Gassenheimer, Ener1 CEO, at Volvo

As a consequence, the firm’s share price has plummeted to just 45.1 cents. Two years ago, its share price was over $7.

What now? We’re not sure, but things don’t look so good for Ener1. 

But wait. There’s more. A tie between Think and Ener1 that could just save the firm - Think’s newest owner, Russian businessman Boris Zingarevich

You see, Think’s new owner - who happens to be close friends of both the Russian President and the Russian Prime Minister - also sits on the board of directors at Ener1 as its largest shareholder. 

Admittedly, Zingarevich’s dealings with Ener1 are ‘indirect’, but should Ener1 declare chapter 11 bankruptcy, we’d expect him to step in to help restructuring. 

After all, what use is buying an electric car firm when the company which helped design its primary battery pack might not survive?

The lesson from all of this? Don’t invest in a customer that doesn’t pay their bills. 

[Financial Times (subscription required)]


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