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Written by Akash Sriram and Zaheer Kachwala
(Reuters) – Negotiations between cash-strapped Fisker and a potential deal with major automakers have collapsed, with the New York Stock Exchange dropping the electric vehicle startup’s shares due to “unusually low” price levels. The plan is to delist the company.
The New York Stock Exchange also announced it had halted trading in the stock on Monday, hours after suspending it pending an announcement. Fisker stock was trading at $0.09 before the trading halt, and closed Friday at $0.13.
The termination of negotiations with the unnamed automaker has led Fisker to explore strategic options, including an in-court or out-of-court reorganization and a capital market transaction, the company announced Monday.
If the shares are delisted, the company would be required to offer to repurchase its 2.50% unsecured convertible notes due 2026, and an event of default would occur under its senior secured convertible notes due 2025.
“We do not currently have sufficient cash reserves or financial resources sufficient to satisfy all amounts payable under the 2026 Notes or the 2025 Notes and, as a result, such events would “This could have a material adverse effect on our results of operations and financial condition.”
The news comes a week after the company suspended production of electric vehicles, increasing uncertainty over its future.
“I can’t say whether it will be next week or next year, but it’s inevitable,” said Thomas Hayes, chairman of hedge fund Great Hill Capital, about the growing possibility that Mr. Fisker will file for bankruptcy protection.
The potential bankruptcy makes Fisker the second failed auto startup for Henrik Fisker, who started his career as a car designer and was also a Tesla consultant.
His previous endeavor, Fisker Automotive, fell victim to the 2008 financial crisis and filed for bankruptcy in 2013, despite obtaining a $192 million loan from the Department of Energy.
Fisker’s newest business was founded in 2016 and went public through a merger with a blank check company at a valuation of $2.9 billion.
But a combination of supply chain issues, production delays and financing hurdles caused its market valuation to plummet to less than $100 million.
Reuters reported earlier this month that Japanese automaker Nissan was in talks to invest in the startup.
struggle to raise funds
Fisker announced early Monday that it could not meet closing conditions related to its attempt to raise up to $150 million by selling convertible notes after missing interest payments.
The $8.4 million payment on some bonds due 2026 was scheduled to be paid on March 15, but the company wanted to use a 30-day grace period to discuss its capital structure with investors, so it didn’t have sufficient liquidity. He stated that he did not pay the amount even though he had sex with him. .
Funding has been difficult for loss-making EV startups, which have little revenue as they struggle to ramp up production and deliver to customers amid fierce competition and a tough economy.
Separately, Fisker announced that it will ask investors to vote on the proposed reverse stock split at its April 24 shareholder meeting in order to comply with New York Stock Exchange listing standards.
Fisker stock has lost more than 90% of its value this year after the company issued a going concern risk warning in February and paused investments in future projects until it secured partnerships.
It pivoted to a dealer-partner model earlier this year after delivering less than half of the vehicles it produced in 2023 due to logistical issues.
Fisker has pursued a different strategy from Tesla and other EV startups by relying on auto supplier Magna to assemble its vehicles, rather than investing the capital to build and operate its own factories. .
The Fisker Ocean competes with a growing number of midsize electric SUVs, including Tesla’s Model Y SUV and Ford Mustang Mach-E.
(Reporting by Zaheer Kachwala and Akash Sriram in Bengaluru and Joe White in Detroit; Editing by Shilpi Majumdar, Arun Koyur and Devika Shamnath)
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