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EnerDel parent facing shareholder legal battle

IBJ Staff
October 19, 2011
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A federal judge in New York as early as this week could chose a lead plaintiff from among at least three lawsuits accusing the parent of Indianapolis-based advanced-battery maker EnerDel of misleading investors about its financial condition.

Investors began filing the suits in August, days after New York-based 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.

The restatement stemmed from write-downs in the company’s investment in Norwegian electric car maker Think, which was behind in payments to Ener1 for batteries.

Think, which assembles cars in Elkhart, filed for bankruptcy this summer. It has since been been acquired by investment group led by Russian entrepreneur Boris Zingarevich, who also is a major investor in Ener1.

Smaller investors who filed suit since August allege that Ener1 made false and misleading statements about Think’s true condition and failed to make timely impairment to the value of its Think investment.

Ener1’s shares have tumbled from more than $4 a share in January, when Vice President Joe Biden visited EnerDel’s Greenfield battery plant, to about 27 cents per share in recent days. The company expressed concerns about its ability to stay afloat in regulatory documents filed in August.

According to federal court records, the largest group of investors filing suit appears to have lost an aggregate $379,891.

Proving “loss causation” in such lawsuits can be a challenge. Courts have raised the burden of proof for plaintiffs to show a misstatement caused them financial loss.

“You have to prove the information was material and that the information that was missing caused the loss,” said Irwin Levin, a partner of Indianapolis law firm Cohen & Malad, which has successfully prevailed in such suits over the years.

Ener1’s Indianapolis-area operations at the beginning of the year employed about 350 people. Company officials declined to comment on the recent lawsuits, saying they are in a quiet period amid the earnings-restatement process.

The Indiana operations produce lithium-ion batteries used for hybrid cars — mostly the Think — and for power-grid storage. Ener1 also has struck preliminary agreements to supply batteries for electric cars in China, and is slated to provide batteries for a Volvo hybrid station wagon.

The company applied for $290 million in federal loan guarantees and is awaiting word on approval. It previously received a $118.5 million U.S. Department of Energy grant.

This story originally ran in the Oct. 18, 2011, IBJ Daily, a sister publication of Indiana Lawyer.
 
 

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  1. Someone off their meds? C'mon John, it is called the politics of Empire. Get with the program, will ya? How can we build one world under secularist ideals without breaking a few eggs? Of course, once it is fully built, is the American public who will feel the deadly grip of the velvet glove. One cannot lay down with dogs without getting fleas. The cup of wrath is nearly full, John Smith, nearly full. Oops, there I go, almost sounding as alarmist as Smith. Guess he and I both need to listen to this again: https://www.youtube.com/watch?v=CRnQ65J02XA

  2. Charles Rice was one of the greatest of the so-called great generation in America. I was privileged to count him among my mentors. He stood firm for Christ and Christ's Church in the Spirit of Thomas More, always quick to be a good servant of the King, but always God's first. I had Rice come speak to 700 in Fort Wayne as Obama took office. Rice was concerned that this rise of aggressive secularism and militant Islam were dual threats to Christendom,er, please forgive, I meant to say "Western Civilization". RIP Charlie. You are safe at home.

  3. It's a big fat black mark against the US that they radicalized a lot of these Afghan jihadis in the 80s to fight the soviets and then when they predictably got around to biting the hand that fed them, the US had to invade their homelands, install a bunch of corrupt drug kingpins and kleptocrats, take these guys and torture the hell out of them. Why for example did the US have to sodomize them? Dubya said "they hate us for our freedoms!" Here, try some of that freedom whether you like it or not!!! Now they got even more reasons to hate us-- lets just keep bombing the crap out of their populations, installing more puppet regimes, arming one faction against another, etc etc etc.... the US is becoming a monster. No wonder they hate us. Here's my modest recommendation. How about we follow "Just War" theory in the future. St Augustine had it right. How about we treat these obvious prisoners of war according to the Geneva convention instead of torturing them in sadistic and perverted ways.

  4. As usual, John is "spot-on." The subtle but poignant points he makes are numerous and warrant reflection by mediators and users. Oh but were it so simple.

  5. ACLU. Way to step up against the police state. I see a lot of things from the ACLU I don't like but this one is a gold star in its column.... instead of fighting it the authorities should apologize and back off.

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