MONTREAL - The Lion Electric Company (NYSE: LEV) (TSX: LEV), known for manufacturing all-electric urban vehicles, has revised its senior credit facilities and secured additional financing, as per its recent announcements. The company, which specializes in medium and heavy-duty electric vehicles, including school buses, has negotiated amendments to its existing credit agreements and entered into a new loan arrangement under the ESSOR program.
The amendments to Lion Electric's senior revolving credit agreement, facilitated by a syndicate led by the National Bank of Canada (OTC:NTIOF), include a suspension of financial covenants until September 30, 2024. During this covenant relief period, the company must maintain available liquidity of at least C$15 million. The agreement also imposes enhanced reporting obligations and restrictions on the use of funds.
Simultaneously, Lion Electric has entered into an ESSOR program loan with Investissement Québec for C$5 million, potentially extendable to C$7.5 million. This loan carries a 13% annual interest rate and allows for a 12-month moratorium on principal and interest payments.
Further adjustments were made to a loan agreement with Finalta Capital and Caisse de dépôt et placement du Quebec, aligning its liquidity requirements with those of the amended revolving credit agreement.
The amendments include an interest rate increase to 13% and capitalization of half the interest during the covenant relief period. Additionally, the company amended its non-convertible debentures, issued in July 2023, to capitalize 50% of the interest payable during the same period.
While Lion Electric continues to explore various refinancing initiatives and alternatives to improve liquidity and strengthen its financial stature, there is no guarantee of success or timing for these potential opportunities. The company's shares are publicly traded on both the New York and Toronto Stock Exchanges.
This financial restructuring is based on a press release statement from the company, and it reflects Lion Electric's efforts to navigate its current financial obligations while seeking avenues for future stability. The full details of the amendments and the new loan agreement will be available on Lion Electric's profiles on SEDAR+ and EDGAR.
In other recent news, Lion Electric Company has successfully completed the final certification for its LionBattery HD, a lithium-ion battery pack designed for its heavy-duty trucks. This development follows the company's December 2023 certification of its medium-duty battery pack, the LionBattery MD. The company's battery production facility currently boasts an annual manufacturing capacity of 1.7 gigawatt hours.
In terms of financial performance, Lion Electric reported a steady revenue of $55.5 million in the first quarter of 2024, marking a 1% year-over-year increase. The company's order book is valued at approximately $475 million. Despite facing challenges such as subsidy program delays, Lion Electric managed to deliver 50 buses and start deliveries of new Lion5 trucks and LionD school buses from their Joliet facility.
However, analyst firms DA Davidson and BMO Capital Markets have revised their outlook on Lion Electric. DA Davidson maintained a Buy rating on the stock but reduced its share price target, following the company's Q1 earnings report. BMO Capital Markets also lowered its stock price target due to ongoing concerns with the company's financial performance and outlook, maintaining a Market Perform rating.
InvestingPro Insights
The Lion Electric Company's recent financial restructuring to address its liquidity concerns is reflected in its real-time metrics from InvestingPro. With a market capitalization of $200.27 million, the company is operating under a significant debt burden and may face challenges in meeting its interest payments, as indicated by an adjusted P/E ratio of -2.6. This is further underscored by a negative gross profit margin of -5.67% over the last twelve months as of Q1 2024, suggesting that Lion Electric is struggling to convert revenues into gross profit efficiently.
InvestingPro Tips highlight that analysts have revised their earnings downwards for the upcoming period, which may have contributed to the stock's poor performance, trading near its 52-week low. Additionally, the company's stock price has experienced considerable volatility, declining by 17.81% over the past month and 35.67% over the last three months. These factors could be crucial for potential investors considering the company's financial health and future profitability prospects.
To gain deeper insights and access additional InvestingPro Tips for Lion Electric, visit https://www.investing.com/pro/LEV. For those interested in a subscription, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. There are 15 more InvestingPro Tips available, providing a comprehensive analysis of the company's financial position and stock performance.
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