Canada’s Lion Electric Company (TSX: LEV) is throwing in the towel. The electric vehicle maker has seen its grace period end under certain covenant reliefs granted by lenders, and as a result is expected to file for creditor protection.
More specifically, National Bank of Canada, who represents a syndicate of lenders under a senior revolving credit agreement, as well as Caisse de depot et placement du Quebec, who has provided a loan to the automaker, has let a covenant relief period expire. As per Lion Electric’s third quarter filings, it currently owes $117.1 million under the credit agreement, and an additional $22.7 million in relation to the CDPQ loan. Collectively, long-term debt owed by Lion Electric totals approximately $292.6 million.
With lenders no longer willing to extend covenant relief, Lion Electric is in default of its debt requirements, with the default on the credit agreement and loan causing cross-defaults on other debt, As a result, Lion Electric is said to be in discussions with senior lenders to obtain funding under a debtor-in-possession credit facility, with the company expected to file for creditor protection under the Companies’ Creditors Arrangement Act. The filing is required for the company to restructure and pursue a sales and investment solicitation process.
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In connection with the filing, Lion Electric is expected to halt for trading immediately, and be delisted from both the New York Stock Exchange and the Toronto Stock Exchange.
Lion Electric last traded at $0.345 on the TSX.
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