By Dow Jones Business News, October 07, 2013, 03:04:00 PM EDT
By Katy Stech
Ecotality Inc. (ECTYQ), the maker of Blink electric-vehicle-charging stations, has received a $3 million purchase
offer to kick off the upcoming bankruptcy auction for its business.
In court papers, officials at Ecotality, which obtained a $100 million grant from the U.S. Department of Energy, said
that interested buyers will have to beat the initial offer from a company called Tellus Power Inc. if they want to take
ownership of the San Francisco company.
Company officials didn't explain in documents filed in the U.S. Bankruptcy Court in Phoenix whether Tellus Power--if
successful at auction--would keep the 54-worker company operating.
Representatives of Tellus Power, based in Irvine, Calif., couldn't be reached using the contact information listed in
court papers. An Irvine, Calif.-based company called Tellus Power, which couldn't be confirmed as Ecotality's lead
bidder, said in a recent job posting that it was the U.S. subsidiary of Tusai Holdings, a renewable-energy product
manufacturer based on Hong Kong.
The company's auction is scheduled for Tuesday, though some of the company's creditors have asked Judge Randolph
Haines to push back the date. A delay could give challengers more time to evaluate Tellus Power's bid, which was
unveiled late Saturday, attorneys for the company's unsecured creditors committee said in court papers.
The winning bidder's offer is set to be reviewed by Judge Haines at an Oct. 9 hearing.
Money from the sale will pay off some of the company's debts, which grew after Energy Department officials stopped
reimbursing Ecotality's expenses in August. Prior to taking out a $1.25 million bankruptcy loan, company officials said
that they had less than $500,000 in cash.
The agency had initially agreed to pay about 45% of the company's costs--up to $100.2 million--related to its program
to add charging stations in 21 major U.S. cities. The agency's program, which was announced with a $218 million price
tag, wasn't completed by an April deadline, partly because of the company's struggles, said Chief Executive Ravi Brar in
The company's sale staff and dealers who tried to sell charging stations to customers outside of that federal program
couldn't bring in enough money to cover expenses, Mr. Brar said.
Ecotality has also grappled with a charger-plug-melting problem that, as of the bankruptcy filing, had yet to be
explained. Some car makers have threatened to tell their drivers not to use the company's charging stations until they
replace all of the connector plugs, Mr. Brar said.
The Blink charging stations, more than 12,000 in all, are installed in residential garages and at shopping malls,
restaurants, hotels and other places where drivers can plug in their cars to be recharged for a two- to eight-hour
Retailers like Ikea, Macy's Inc. ( M ) and Wal-Mart Stores Inc. ( WMT ) have installed Blink charging stations in their
parking lots, according to court papers.
The company also makes Minit-Charger stations meant for airport ground-support vehicles and other industrial vehicles
that run on electricity. A new product line for Minit-Charger deemed "critical to [the company's] growth" won't be
introduced this year after it had "unacceptable performance shortfalls" during testing, further hurting the company's
finances, according to court papers.
After Ecotality officials disclosed the connector-plug details and Minit-Charger delays to the U.S. Securities and
Exchange Commission on Aug. 8, several shareholders filed lawsuits that allege that company officials misled investors
about the company's financial health earlier this year.
One lawsuit, which said it could expand to a become class action with many plaintiffs, pointed out that the company's
stock price "spiked" by more than 40% on April 16 after Mr. Brar delivered the company's 2012 results and future
outlook. But when company officials announced the connector plug dispute on Aug. 12, its stock--which had a recent peak
of $2.40 a share--plummeted to close at 30 cents, according to the lawsuit.
The company's bankruptcy filing prevents new shareholders lawsuits.
Ecotality opened in 1999 to sell biodegradable products but switched focus to renewable-energy pursuits in 2006. It
also runs a consulting business for cities and utilities that need advice on building out their charging infrastructure.
(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection. Go to
Write to Katy Stech at firstname.lastname@example.org.
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