Lion Electric seeks protection from its creditors

Lion Électrique Seeks Creditor Protection Amid Financial Struggles

Quebec-based electric vehicle manufacturer, Lion Électrique, announced on Tuesday that it will seek protection from creditors after failing to secure funding by the end of an emergency loan period. The company’s efforts to extend the due dates of several loans to December 16 did not result in a viable financial solution.

In a statement, Lion Électrique confirmed that it intends to file for protection under the Companies' Creditors Arrangement Act (CCAA) to restructure its operations and financial affairs. This process will include a formal sale and solicitation of investments related to the company or its assets.

The company is in discussions with its senior lenders to secure additional funding through a new debtor-in-possession credit facility. Lion also indicated that its stock on the Toronto Stock Exchange (TSX) and the New York Stock Exchange (NYSE) has been suspended, with the halt expected to continue until both exchanges complete their review of the company’s listing eligibility.

In early December, Lion attempted to stabilize its finances by selling its $50 million innovation center to Aéroports de Montréal (ADM), following the high-profile opening of its lithium-ion battery plant in Mirabel a year and a half earlier. However, this measure proved insufficient to resolve the company's liquidity crisis.

Despite receiving over $200 million in public funding, sources had previously highlighted operational challenges at Lion, including disorganized vehicle development, insufficient road testing, and significant cost overruns. In response, a company spokesperson stated, "Lion has conducted rigorous testing with third-party partners to meet certification requirements and only sells vehicles to customers with all required certifications."

Lion's challenges also included a notable order of 50 trucks from Canadian National (CN), which, four years later, has yet to add any of them to its fleet.

Lion Electric's Milestones:

• July 2008: Autobus Lion was founded by Marc Bédard and Camille Chartrand, former executives of a bus manufacturer.
• November 2017: Power Corporation made a significant investment, acquiring a 43.8% stake in the company.
• May 2021: Lion Electric went public, raising $200 million through listings on the New York and Toronto stock exchanges.
• November 2021: Marc Bédard sold $16.5 million worth of Lion shares at an average price of $14.85 per unit.
• December 2022: Lion delivered its first bus from its Illinois plant, which has faced low demand and remains underutilized.
• April 2023: Lion opened its battery plant in Mirabel, but the plant currently has excess capacity.
• July 2023: Lion raised $142 million, with over half of the funds coming from Quebec's Fonds FTQ and Fondaction.
• July 2024: Lion announced the layoff of 300 workers, in addition to 370 layoffs previously disclosed.