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Deadline to meet its loan obligations is November 30.
Bloomberg News
Lion Electric chief executive Marc Bedard poses next to a battery at the inauguration of the first battery manufacturing plant for medium and heavy vehicles in Quebec at Lion Electric in Mirabel, Que., Monday, April 17, 2023. Photo by Graham Hughes/The Canadian Press
Canada’s electric truck and bus manufacturer Lion Electric Co. is up against a deadline this weekend to find new investors amid a cash crunch and an EV market that’s in turmoil.
The St-Jerome, Que.-based company said on Nov. 18 that it had received a two-week extension of its credit agreement with three lenders, as well as temporary relief on the conditions of a loan provided by the Caisse de depot et placement du Quebec and Finalta Capital Inc.
The deadline to meet its obligations to these creditors is Saturday. But Lion Electric hasn’t been able to find additional funding yet, according to Quebec’s economy minister, raising the odds it will seek creditor protection.
The Quebec government has supported the firm with committed investments totalling $192 million — and has said it’s willing to do more to save the firm, but only if other private investors also participate.
“We won’t go alone,” Economy Minister Christine Frechette said on Radio-Canada Thursday.
Chief executive Marc Bedard acknowledged on a Nov. 6 conference call that the ability to continue was in doubt if it couldn’t raise more money. The company didn’t respond to a request for comment Friday.
Shares are down by almost 90 per cent since the beginning of the year, trading at less than 20 cents in New York.
Lion Electric’s largest shareholder is Power Corp. of Canada, the holding company controlled by the billionaire Desmarais family, with a 34 per cent stake, according to data compiled by Bloomberg.
Supply chain disruptions, urgent financing needs, scaling issues and a dispute with a battery supplier were among the company’s problems after it went public by merging with a special purpose acquisition company in 2021.
Since then, the company has also deployed close to US$250 million in capital expenditures as it multiplied new models, and built an electric bus manufacturing plant in Joliet, Ill., and a battery pack assembly plant in Mirabel, Que.
Meanwhile, revenue and deliveries have been under pressure, partly due to delays in subsidy and incentive programs in Canada and the United States, as well as slower electric vehicle adoption. In the quarter ended Sept. 30, the company reported sales of US$31 million, down from US$80 million a year ago; deliveries dropped by 64 per cent. The manufacturer, which had as many as 1,400 employees at the start of 2023, has since reduced its workforce by almost half.
Quebec’s EV industry is going through a difficult period. Lion Electric’s filing comes after the restructuring process for Montreal-based electric watercraft and snowmobile maker Taiga Motors Corp. The company was bought out in October by British serial entrepreneur Stewart Wilkinson.
Additionally, uncertainty surrounds a $7 billion EV battery factory near Montreal built by Swedish manufacturer Northvolt AB, which filed for bankruptcy protection on Nov. 21.
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