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Fisker pauses production, faces bankruptcy and delisting of stock

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Fisker will pause production for six weeks as it faces bankruptcy and delisting of its Class A stock, according to a company press release and Securities and Exchange Commission (SEC) filings

The release says production will pause starting this week to “align inventory levels and progress strategic and financing initiatives.” 

On March 15, the company, which produces only electric vehicles (EVs), failed to make an interest payment of about $8.4 million, biding its time as it seeks a partnership with an OEM, the filing says. 

“We expect to require additional cash in 2024 for debt service and investment needs, and our ability to generate cash from operating activities will depend on our ability to transition to a dealer model and sell vehicles,” the filing says. “Accordingly, we have concluded there is substantial doubt as to our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to raise additional debt or equity financings, enter into a strategic partnership with an OEM and generate cash from the sale of vehicles. We need significant additional funding in the near term to execute our business plan and to continue our operations.”

If Fisker is unable to raise capital to meet its debts, it could need to seek protection under bankruptcy laws, the release says. 

The filing also says the company received notice on Feb. 15 from the New York Stock Exchange (NYSE) that its common stock’s closing price was less than $1 for more than a 30 trading days. 

“Under NYSE rules, we have a period of six months from receipt of the NYSE notification to cure the stock price deficiency and regain compliance with the NYSE’s continued listing Standards,” the filing says. 

Failure to meet the standards within the timeframe could mean Fisker’s stock will be delisted as a Class A Common Stock, according to the filing. 

Delisting of the stock could make it difficult for stockholders to sell Fisker’s common stock, the filing says. 

“Further, an inactive trading market may also impair our ability to raise capital by selling our securities or to attract and motivate employees through equity incentive awards,” the filing says. 

According to Bloomberg, Fisker shares dropped as much as 14% after the start of regular trading Monday. Overall, the stock has fallen 90% this year. 

It also reported Fisker warned last month that it could have difficulty staying in business. It said, at that time, it would cut 15% of its workforce. Company difficulties included production issues, software glitches, and short-seller criticism. 

The company has some hope in a $150 million financial commitment from an existing investor, according to the company’s press release. It says the financing will be organized in four tranches. 

Fisker’s press release also outlined a possible partnership with an OEM. 

“Fisker is also continuing negotiations with a large automaker for a potential transaction which could include an investment in Fisker, joint development of one or more electric vehicle platforms, and North America manufacturing,” the release said. “The closing of any transaction would be subject to satisfaction of important conditions, including completion of due diligence and negotiation and execution of appropriate definitive agreements.”

Bloomberg previously reported from unnamed sources that Fisker was in talks with Nissan. 

In its release, Fisker said it has about 4,700 vehicles in its current inventory from its 2023 and 2024 production. 

“While it has not completed an NRV [net realizable value] analysis for 2024, Fisker believes the completed vehicle value for its inventory as of March 15, 2024, is in excess of $200 million,” the release said.


photo courtesy of Victor Golmer/iStock

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