Fisker Inc. officials announced Monday that they have received a financing commitment from one of the electric vehicle maker’s investors for a sale of up $167 million in senior secured convertible debt. After a 10% original issue discount, the company’s proceeds will be $150 million.
The announcement comes a few weeks after executives warned the company didn’t have enough cash to continue operating. Last week, the Wall Street Journal reported that Fisker was preparing for a potential bankruptcy filing by retaining restructuring advisors, financial advisor FTI Consulting, and law firm Davis Polk.
Fisker released a statement on the matter, saying that while the company does not comment on “market rumors and speculation,” it does often work with outside advisors “to help manage its business and assist in developing and executing strategies.”
Under the deal, the notes will be sold and issued in four tranches that will be convertible into Fisker common stock at any time the (unnamed) investor chooses. The first tranche will be $35 million, while the remaining three can be any amount.
In a filing with the U.S. Securities and Exchange Commission, Fisker disclosed that it did not file its annual report on time, putting the company in default under its agreement for other convertible notes due in 2025. However, the holder of those notes has waived the default and Fisker said it was working “diligently” to file its annual report “as quickly as possible.”
In the same filing, despite having $121 million in cash ($32 million of which is restricted), the Fisker team said the company has not made a required $8.4 million cash payment on its 2026 notes, putting it in default again. The note holder again waived the default and executives are taking advantage of a 30-day grace period “to allow time for discussions” with certain stakeholders and add liquidity as they continue to seek a partnership with another auto manufacturer.
According to preliminary reports, Fisker spent about $430 million on material for vehicles, selling/administrative costs and research and development in the final three months of 2023. It ended the year with $326 million, making the $150 million commitment a Band-Aid at best.
Alongside the financing announcement, Fisker said it will pause production for six weeks beginning Monday to "align inventory levels and progress strategic and financing initiatives.” The EV maker has produced 1,000 vehicles so far in 2024 and delivered 1,300. Its current inventory has roughly 4,700 EVs with an estimated value of $200 million.
Shares of Fisker (Ticker: FSR) have plummeted over the past few weeks. They tumbled 46% to $0.39 per share after the going-concern warning on Feb. 29, then fell from $0.32 per share to $0.15 per share in one day on March 14. As of writing March 18, shares are trading at $0.15 per share.
