Electric powersports company Taiga Motors (TSX: TAIG) is evidently undergoing severe financial difficulties. The firm this morning revealed that in an act of desperation for further funding, it has agreed to re-work its current board of directors as a means of obtaining further funding from current directors.
The company has managed to get two major shareholders, Northern Private Capital and Investissement Quebec, to subscribe for $40.15 million in further funding, which will take the form of 10% secured convertible debentures, which are due March 2028 and feature a conversion price of $3.25 per share. NPC will be taking down $25.15 million of the financing, with Investissement Quebec taking the remaining $15.0 million.
The two investors have also agreed to an option to invest up to $5.0 million each, with that option expiring April 27.
The funding follows a special committee of Taiga’s board being assembled to consider alternatives for the company. This financing appears to be the best method for the firm to move forward, with the funding requiring a special exemption from the TSX to approve the deal, with the company citing a “serious financial difficulty” exemption so as to close the financing without shareholder approval – which also comes with a delisting review.
As part of the funding, NPC will be permitted to appoint two representative members to the board and one independent director, while Investissement Quebec will appoint one member. Four members of the board of directors will resign once the firm releases its 2022 financial results, with Andrew Lapham, Michael Fizzell, Francis Seguin, and Marc Fortin to join the board immediately thereafter.
Taiga has also agreed to maintain its head office and R&D operations in the province of Quebec, so long as Investissement Quebec is a shareholder.
Funds from the financing are slated to be used to pay current and future obligations, to fund budgeted expenditures including those related to the ramp up of production of electric powersports vehicles, for the procurement of tooling, and working capital purposes.
The firm also revealed it sold 36 personal watercrafts and 104 vehicles in the fourth quarter, generation revenues of $1.3 million. Full year revenues for 2022 are pegged at $3.1 million. The company is said to have cash of $22.8 million as of December 31, which dwindled to $8.3 million as of February 28.
Taiga Motors last traded at $2.06 on the TSX.
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