MONTREAL - The Lion Electric Company (NYSE: LEV) (TSX: LEV), a manufacturer of all-electric medium and heavy-duty urban vehicles, has obtained creditor protection under the Companies' Creditors Arrangement Act (CCAA), as per the Superior Court of Quebec's initial order. With a substantial debt burden of $388 million and negative EBITDA of $86.6 million in the last twelve months, the company, alongside its subsidiaries, will undergo restructuring with Deloitte Restructuring Inc. acting as the court-appointed monitor. InvestingPro data reveals the company has been rapidly burning through cash, with revenue declining 26% year-over-year.
The court's order also facilitates a sale and investment solicitation process (SISP) for Lion Electric's business or assets, aiming to secure the best possible transaction for its stakeholders. The process is supported by debtor-in-possession financing (DIP Financing) from its senior lenders, subject to court approval and other conditions.
During this period, Lion Electric's management will continue to oversee daily operations under the monitor's supervision, maintaining customer support for vehicle maintenance and servicing. The initial court order and further details about the CCAA proceedings are available on the monitor's website.
Trading of Lion Electric's shares on both the Toronto Stock Exchange and the New York Stock Exchange has been suspended, with delisting reviews underway by both exchanges. The outcome of these reviews will determine the future of the company's publicly traded securities. The stock has experienced a dramatic decline, losing nearly 87% of its value over the past year. InvestingPro subscribers have access to 18 additional key insights about Lion Electric's financial situation through exclusive ProTips.
This restructuring move follows Lion Electric's previous disclosures regarding material uncertainties about its ability to continue as a going concern. According to InvestingPro's Financial Health Score of 1.41 (labeled as WEAK), the company faces significant challenges. The company, known for its zero-emission electric school buses and other vehicles, has emphasized its commitment to electric transportation and the benefits it brings to society and the environment.
This article is based on a press release statement from The Lion Electric Company.
In other recent news, Lion Electric faces significant financial challenges, with an announced default under its senior debt instruments and a looming debt burden of $388 million. The company is in negotiations with senior lenders to secure additional funds and expects to seek creditor protection to restructure its business. Recent developments include the sale of its Mirabel, Québec innovation center to Aéroport de Montreal for C$50 million, aimed at reducing its long-term debt.
In addition, Lion Electric has implemented cost-saving measures, including headcount reductions, which are expected to result in annual savings of approximately $65 million. BMO Capital Markets has revised Lion Electric's stock price target to $0.60, down from $0.80, amid a year-over-year decline in volumes and ongoing profitability issues.
These recent developments underscore Lion Electric's strategic efforts to improve its financial stability. Despite facing significant challenges, the management team remains optimistic about the company's future.
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