Electric Lion | After cuts, Lion considers asset sale

After months marked by several hundred layoffs and a refocusing of its activities, Lion Électrique is opening the door to asset sales to replenish its coffers, where reserves are dwindling.

This scenario, mentioned Tuesday by the manufacturer of school buses and electric trucks, is mentioned at the very end of a press release in which relaxations in borrowing conditions are announced with certain lenders – including the Caisse de dépôt et placement du Quebec (CDPQ) and Finalta Capital.

The company based in Saint-Jérôme had also obtained leniency from its lenders on July 2, but its announcement made no reference to a potential sale of assets to “strengthen its financial situation”.

“These opportunities could include certain refinancing activities related to its debt instruments, the sale of certain of its assets and/or any other opportunity or alternative,” underlines the Quebec manufacturer in its most recent message to investors.

It was not possible to know what prompted Lion to raise the asset sale scenario. In an email, its vice-president of truck and public affairs, Patrick Gervais, limited himself to indicating that there would be “no further comments at this stage”.

One thing is certain, the addition of this option in the scenarios studied by Lion to replenish its coffers is not trivial, believes Carl Brousseau, associate professor at the School of Accounting at Laval University, who specializes in particular in what revolves around the stock markets.

“We are not talking about a simple change in the sense that if there is nothing new, we are copying and pasting what had previously been broadcast,” explains the expert. But when we make a change [de la sorte]we have an opening for something else. »

In the United States, Lion does not own the factory it operates in the suburbs of Chicago, Illinois. South of the border, it is trying to sublet part of the vast 900,000 square feet of space it has in Joliet.

In Quebec, the manufacturer has already concluded a sale-leaseback agreement with its battery pack factory in Mirabel. This means that he is not the owner of the premises even if he continues to use the asset. According to its most recent quarterly report, the company “owns” the electric school bus and truck assembly plant in Saint-Jérôme, in the Laurentians.

Need money

Time is running out for Lion. At the end of the second quarter, as of June 30, it only had US$2 million left in its coffers. The company also had access to an additional US$23 million through a credit facility. She also obtained a loan of up to 7.5 million from the Legault government on July 2. The fact remains that its room for maneuver is slim.

Since last fall, the ax has fallen four times at Lion.

Result: around 670 people are currently on forced leave. The company’s workforce on both sides of the border is approximately 750 employees.

Due to deliveries below forecasts, the company decided to refocus the purpose of its battery pack complex in Mirabel. The location, which was supposed to supply the school trucks and buses assembled at Lion, found itself with excess capacity.

This plant can supply the equivalent of 5,000 vehicles per year, well beyond the manufacturer’s deliveries. To sell off surpluses, we now hope to sell them to external customers.

On the Toronto Stock Exchange on Tuesday, Lion shares remained stable, closing at 92 cents. Since the start of the year, the stock has fallen 60%.