Lion Electric (LEV), the struggling Quebec-based manufacturer of zero-emission battery-electric Class 6 and 8 semis and school buses, has confirmed its inability to secure a business partner in order to continue to receive public funds from the Coalition Avenir Quebec government. The deadline for doing was Dec. 16. A bankruptcy filing has not been publicly discussed at this time.
The company announced on Dec. 1 the failed attempt to find a financial backer. On the same day, Lion president Nicholas Brunet resigned and 400 employees (over half of the workforce) were temporarily laid off at its Joliet, Illinois EV school bus factory and Canadian headquarters. An estimated 300 employees remain to manage the company's operations, sales, deliveries, customer service.
[Related: Lion Electric suspends Illinois plant production, lays off hundreds]
It let go 520 employees across all departments earlier this year.
With the relief period over, Lion is officially in default with the terms of its revolving credit and loan agreements. Lenders can now exercise their rights for immediate repayment of borrowed funds. Trading in Lion's common shares on the New York (NYSE) and Toronto (TSX) stock exchanges has been halted until both bodies complete a full review regarding the company's financial health. No re-listing timeline was provided.
The stocks closed Monday, Dec. 15 at just 25 cents and 34 cents per share on the NYSE and TSX, respectively. Lion officials offered no further comment.
What happens next?
Lion has confirmed it is "in discussions with its senior lenders to obtain additional funds pursuant to a new debtor-in-possession credit facility and expects to seek creditor protection under the Companies' Creditors Arrangement Act in order to restructure its business and financial affairs and pursue a formal sales and investment solicitation process in respect of [its] business or assets."
Existing customers are expected to continue to receive services during this time but likely at a reduced pace due to just 300 or so Lion employees remaining.
Lion has a decent chance of finding a financial savior because it already has the ability to build and assemble many of its vehicles' components, ranging from the chassis, battery packs, truck cabins, and bus bodies.
Another question is whether the Quebec and Ottawa governments will be a part of that rescue package given they have already invested a combined $207 million CAD into Lion without much to show for it.
Democrat Illinois Gov J.B. Pritzker, who was present at the 900,000 square-foot Joliet factory opening in July 2023, expressed disappointment earlier this week at Lion's situation. He also blamed President-elect Trump's anti-EV rhetoric as a reason for Lion's current situation. State Republicans quickly responded to the accusation, claiming that the government cannot force people to buy EVs, commercial or passenger.
[Related: Illinois Gov 'disappointed' in struggling Lion Electric, blames Trump]
Pritzker made it clear, however, that Lion has not received any state funds and this will remain so for the foreseeable future.
