The U.S. arm of Alevo, the cash-strapped Swiss battery maker with a high-profile Russian investor, said Friday it was filing for Chapter 11 bankruptcy protection and laying off its 290 workers in Concord, in a blow to efforts to redevelop a former Philip Morris cigarette factory.
The company arrived in Cabarrus County in 2014 with great fanfare, vowing to create hundreds of jobs through its revolutionary energy-storage technology. But production and hiring lagged those projections. The company gained attention this spring when a Russian billionaire with a connection to President Donald Trump emerged as a new investor and installed former associates at the company.
In a statement, Alevo said it had made progress with its “groundbreaking battery technology,” but production challenges left it short on financing. It had been actively seeking new funding, but it wasn’t realized in time.
“This decision was driven by the formidable challenges of bringing a new technology into commercial production and lacking the financial wherewithal to continue on through repeated manufacturing delays,” Alevo Chief Financial Officer Peter Heintzelman said in a statement. “It is a sad day for our dedicated employees and partners, as well as for the promise of Alevo’s technology.”
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The company planned to lay off 245 employees on Friday, followed by the remaining 45 by Sept. 30, according to a notice filed with the state. The company plans to immediately sell off assets, the filing said.
The news in 2014 that a startup technology company was taking over the former Philip Morris campus in Concord was a major boost for the city northeast of Charlotte, promising new jobs and tax dollars at the long-vacant 2,100-acre site. And in February, N.C. Gov. Roy Cooper praised Alevo’s plan to add more than 200 jobs in Concord in return for $2.6 million in tax incentives over 12 years.
But since its start, the company’s plans to sell boxcar-sized batteries that could store power for the energy grid have gone more slowly than projected. Before pledging tax incentives earlier this year, North Carolina officials repeatedly raised questions about Alevo’s finances, records requested by the Observer showed. A Commerce Department official told the Observer Friday that the company has not yet received any payments, noting recipients must first meet job creation and investment goals.
The company’s founder, Jostein Eikeland, is a Norwegian entrepreneur whose business career has seen hits and misses. His website portrays him as a pioneer in cloud computing, but he also helmed a company that filed for bankruptcy in 2008. He has faced questions about his taxes in Norway, although an Alevo spokesman has said he no longer has any liabilities in that country.
To keep the company going, Eikeland needed an influx of new capital.
In March, Alevo (pronounced a-lay-vo) gained global attention with the news that Russian oligarch Dmitry Rybolovlev had invested in the company. Rybolovlev, who made his money as a fertilizer magnate, is the owner of a Monaco soccer team and gained notoriety for an expensive divorce and for buying Trump’s Palm Beach mansion in 2008 for about $100 million.
The Russian billionaire’s luxury jet also generated international intrigue when it landed in Charlotte in November on the same day then-candidate Trump was making a presidential campaign appearance. After some speculation about the visit, a spokesman confirmed that Rybolovlev was in the area for Alevo meetings, not to meet with Trump.
Rybolovlev made his mark on Alevo by bringing in former colleagues, including CEO Vladislav Baumgertner, who had led Rybolovlev’s former company, Uralkali, from 2003 to 2013. Baumgertner was involved in an international tug-of-war when he was arrested in Belarus for alleged tax evasion and later extradited to Russia, where he was eventually exonerated in a murky legal case.
Alevo’s technology was seen as a potential game-changer for the industry, which is integrating energy from relatively small sources, such as solar and wind farms, into a grid that has long relied on coal, natural gas and nuclear power plants. What’s been lacking is the ability to store large amounts of energy until it’s needed, helping utilities smooth out the peaks and valleys of intermittent renewable energy sources.
One of Alevo’s huge batteries, called GridBanks, does appear to be in operation in Hagerstown, Md., while the Delaware city of Lewes has been waiting for months to receive its battery.
“Alevo is like a lot of energy-storage startups,” said David Doctor, CEO of the Charlotte-based energy trade group E4 Carolinas, who recently was part of a conference held at the Concord facility. “You can see they are able to produce the product, but the key is penetration in the market, sales to customers. It’s very difficult for early-stage companies like Alevo to be assured of success.”
Charlotte-based Duke Energy had been looking to install an Alevo battery at its Mount Holly research center in Gaston County, but that no longer appears likely.
“This is disappointing economic news for the region, but we understand the volatility of new technologies and emerging markets,” Duke spokesman Randy Wheeless said. “With many battery projects around the region and nation, Duke Energy remains a supporter of storage technology for the energy industry.”
According to petitions filed Friday in federal bankruptcy court in the Middle District of North Carolina, which has offices in Winston-Salem and Greensboro, Alevo USA and Alevo Manufacturing, both based in Concord, each had assets between $1 million and $10 million and liabilities between $10 million and $50 million.
Concord Mayor Scott Padgett, who received word from Alevo Friday morning, said his thoughts were with the workers losing their jobs.
“Those people took a chance on an innovative project,” he said. “It just didn’t work out. I think that somebody is going to make this work because it’s obvious this would be a great project.”
Padgett is hopeful that another company or companies will someday take over the location. The property, he said, “is still a prime location for a job-creating industry of some kind.”
A company affiliated with Alevo founder Eikeland originally purchased the Philip Morris site for $68.5 million, but the property was later sold to an entity called Bootsmead Land, which then became Alevo’s landlord. The principal owner of Bootsmead is a Charlotte investment firm called Keeneland Capital. The bankruptcy filings listed Bootsmead as one of Alevo’s largest unsecured creditors, owed $693,600.
“We are disappointed that Alevo filed for bankruptcy today,” said Wellford Tabor, managing partner of Keeneland Capital. “They had a big idea and appeared to have great technology that was proving to work in their Maryland installation. Unfortunately, it seems that they ran out of funding before they were able to get their financial footing.”
Keeneland Capital bought the property as a “long-term investment,” Tabor said.
“This is a ‘one-of-a-kind’ property and we are proud to own it,” he said. “We are very committed to the Concord community and look forward to working with them in the months and years ahead to do something very special here.”
Staff writer Bruce Henderson and Kevin G. Hall and Ben Wieder in the McClatchy Washington Bureau contributed.