UPDATE 1-Norway electric carmaker seeks aid, halts production

Mon Dec 15, 2008 5:48pm GMT

* Car maker in "urgent financial distress" seeks state aid

* Says working capital difficult to get, needs up to $29 mln

* Says suppliers severely hit by crisis

* Temporarily halts production in Norway, eyes Q1 restart

(Adds more, details, comments from news conference)

By Aasa Christine Stoltz

OSLO, Dec 15 (Reuters) - The Norwegian maker of the two-seater Th!nk City electric car said on Monday it was halting production and seeking state aid to escape its "urgent financial distress", which was sparked by the global financial crisis.

Like many other car companies, privately-held Think said it had difficulties in obtaining working capital and that automotive suppliers offered tougher terms on parts.

"We are in a very serious situation," Chief Executive Richard Canny told a news conference. He Canny said the company would probably not survive without the government's help.

Asked about the risk of bankruptcy, he said: "We would not have take these actions if it was not serious. We need to intensify efforts to bring in new capital."

He said Think needed 100 million to 200 million crowns ($14.5 million to $29 million) in the short term through guarantees, but declined to be specific on total capital needs for its planned expansion.

Think said it would temporarily stop production at its Norway plant and lay off 50 percent to 70 percent of its employees while sorting out its financial problems.

He said it was hoping to restart production in the first quarter of 2009.

Think said there are "limited possibilities for funding working capital through bank credits without extra guarantees in today's financial markets."

The company has gone bankrupt twice, last in 2006, but found new life with the backing of new owners and investors.

"I honestly think given what is going on in the capital markets it is going to be very difficult," Canny replied when asked whether it would make it without the government's help. He said the company was in a "good dialogue" with the government.

"Every day we are getting increasingly positive signals."

Earlier in December, the Swedish government said it would provide up to 25 billion Swedish crowns ($3.15 billion) in credit guarantees and emergency loans to its ailing auto industry, but has no plans to buy stakes in Volvo or Saab.

RAMP-UP

With one car model in production, the micro Th!nk City, the group plans to ramp up production next year, launch the car in several European cities and set a date for its U.S entry.

Th!nk City has been in production since late October, and the company produced between eight and 10 cars a day. It aims to reach 44 units a day when running at full capacity sometime in 2009.

The company also aims to launch a four-seater version of Th!nk City, which is an emission-free, 95 percent recyclable car with a maximum speed of 65 miles an hour.

A five-seater is expected to be in production by 2011.

"We are ... about to become the world's largest electric vehicle manufacturer which will grow over the next 6-12 months period as we expand from hundreds of units to thousands of units," Canny told foreign reporters during a visit to its offices and production plant on Friday.

Think plans to launch its offer in Copenhagen and Stockholm first, then moving to Paris and London. Th!nk City -- about the size of a Toyota Yaris or Honda Fit -- runs on sodium or lithium batteries and can travel up to 110 miles (177 km) on one charge.

In Norway, which has high taxes on cars, the two-seater costs 212,500 crowns ($30,950), compared with about 170,000 to 190,000 crowns for comparable petrol cars, Canny said. (Editing by Andrew Macdonald)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.