Lion Electric has been hunting for additional financing with the participation of the Quebec government but there’s been no deal cemented yet.Christinne Muschi/The Canadian Press
Lion Electric Co. LEV-T is racing to find new investor backing ahead of a deadline this weekend on its credit agreements as the Canadian maker of electric school buses tries to fight off a possible restructuring under bankruptcy protection.
The Saint-Jérome, Que.-based company, one of the province’s big industrial hopes in the shift to electric vehicles, said earlier this month that it won a two-week extension to Saturday on certain credit agreements with three lenders led by National Bank of Canada. It also said it received some relief on minimum liquidity covenants, among other things, on a loan from Finalta Capital Inc. and the Caisse de dépôt et placement du Québec.
Lion warned at the time that in the event it can’t raise additional funds or negotiate further concessions with its lenders that it won’t be in compliance with the terms of its credit and loan agreements. That in turn could force the company to repay immediately the amounts owed. Without such funds it would likely be pushed into bankruptcy protection.
Lion has been hunting for additional financing with the participation of the Quebec government but has yet to cement a deal, Quebec Economy Minister Christine Fréchette said.
Patrick Gervais, a Lion spokesman, did not respond to a request for comment Friday.
Lion has more than 2,000 electric buses on the road and enjoys big-name backing in addition to support from the Quebec and Canadian governments. Most recently, Quebec’s investment arm offered a loan of up to $5-million to the company in early July. In all, Quebec has pledged more than $140-million to Lion while Ottawa has lent $50-million, according to a tally from news releases.
The company had US$26-million in cash at the end of September.
Ms. Frechette said Quebec will consider offering more financial support to Lion but only if other investors also participate. “We don’t want to be the only ones,” she told Radio-Canada in an interview broadcast Thursday evening. “The private sector also has to be involved.”
The minister said there are other investors that have expressed interest in backing Lion and that talks are continuing. But she warned that a deal could be tough to strike given the tight deadline and that the company could be forced to restructure under bankruptcy protection.
Lion has struggled to get vehicles out the door because of a series of setbacks in recent years, including supply chain disruptions and government red tape. Its troubles add to the bad news hitting Quebec’s electric vehicle industry, which saw electric powersports vehicle maker Taiga Motors Corp. file for creditor protection in June before being bought by British entrepreneur Stewart Wilkinson. The U.S. bankruptcy protection filing by Sweden’s Northvolt AB this month has also raised questions about the future of its planned EV battery factory near Montreal.
Lion shares have collapsed from a peak of $24.21 in June, 2021, to 26 cents on the TSX. The manufacturer went public that year by merging with a special purpose acquisition company and has never made a profit.
The Desmarais family’s Power Energy Corp. is Lion’s biggest shareholder with a 34-per-cent stake, according to data from S&P Capital IQ, while Lion chief executive officer Marc Bedard holds 11.5 per cent. Power has been involved with the company for years, helping it adopt governance and reporting standards and providing a sounding board on strategy.
Other investors in Lion have included the Fonds de solidarité FTQ labour fund real estate developer Mach Group and the Mirella & Lino Saputo Foundation.
The bus maker has scrambled to cut costs in a bid to reduce cash burn, slashing its work force by more than half since 2023 and taking other steps such as leasing out excess factory space at a new truck plant in Joliet, Ill. The company had high hopes for manufacturing electric trucks for commercial use but has since acknowledged that potential customers are slow to adopt them in their businesses.
“We’re very cautious about managing liquidity right now,” Mr. Bédard told analysts on a call in early November. “But obviously, we do have the manufacturing capacity to ramp up at some point.”
Lion has devoted most of its early attention to school buses, specifically to tap public funding. It’s the market segment in which EV adoption is growing fastest because governments subsidize purchases by school boards and private transporters.
But manufacturers such as Lion are at the mercy of government efficiency when those funds get disbursed. The company said in August that lower deliveries in the second quarter were directly related to the impact of the timing of the U.S. Environmental Protection Agency’s US$5-billion clean-bus school program, as well as continued delays and challenges tied to the granting of subsidies in the Canadian government’s $2.75-billion Zero Emission Transit Fund.