GreenPower Announces Second Tranche of Term Loan

Rhea-AI Summary

GreenPower Motor Company (Nasdaq: GP) has announced the second tranche of its secured term loan offering for US$500,000 from companies associated with its CEO and a Director. The loan proceeds will be used for production costs, supplier payments, payroll, and working capital. As an inducement, the company will issue non-transferable share purchase warrants to one lender and bonus shares to two lenders. The warrants will allow holders to purchase common shares at market price for 24 months. The bonus shares will be calculated as 20% of the principal amount divided by market price. This transaction qualifies as a "related party transaction" but is exempt from formal valuation and minority approval requirements. All securities issued will have a four-month statutory hold period.

Positive

• Secured additional working capital of US$500,000 for operations
• Funding secured from insiders shows management confidence in the company
• Loan will help maintain production and operational continuity

Negative

• Related party transaction indicates possible difficulty securing external funding
• Dilutive effect from warrant and share issuance
• Additional debt burden on company's balance sheet

Insights

Corporate Finance Analyst

GreenPower secures additional $500K insider loan for working capital, suggesting ongoing cash flow challenges despite operational continuity.

GreenPower's announcement of a second $500,000 secured term loan from related parties (the CEO and a Director) represents a notable insider financing arrangement designed to address immediate operational needs. This transaction follows a previously announced term loan offering mentioned in their May 13th release, indicating a structured approach to securing working capital.

The allocation of funds toward production costs, supplier payments, payroll, and general working capital suggests the company is experiencing cash flow constraints in maintaining its regular operations. When executives provide financing personally or through their associated entities, it typically signals two things: 1) confidence in the company's future prospects, but 2) challenges in securing traditional financing or difficulties in the current cash position.

The terms include non-transferable share purchase warrants and bonus shares as inducements, effectively increasing the cost of this capital beyond standard interest rates. The warrants allow purchase of shares at market price for 24 months, while bonus shares amount to 20% of the principal divided by market price. These equity components dilute existing shareholders while providing potential upside to the related-party lenders if share prices increase.

The disclosure that this qualifies as a "related party transaction" under MI 61-101, but is exempt from formal valuation and minority approval requirements, indicates the transaction falls below the 25% threshold of market capitalization. This suggests the company's market cap is at least $2 million, as this $500,000 loan (plus inducements) stays under the regulatory threshold.

The ongoing need for insider financing to cover basic operational expenses like payroll and supplier payments points to underlying financial challenges that require more substantial long-term solutions beyond these stop-gap funding measures.

VANCOUVER, BC, May 27, 2025 /PRNewswire/ -- GreenPower Motor Company Inc. (Nasdaq: GP) (TSXV: GPV) ("GreenPower" and the "Company"), a leading manufacturer and distributor of all-electric, purpose-built, zero-emission medium and heavy-duty vehicles serving the cargo and delivery market, shuttle and transit space and school bus sector, announces the second tranche of its previously announced secured term loan offering for an aggregate principal amount of U.S. $500,000 (collectively, the "Loans"). Please refer to the Company's news release dated May 13, 2025 for more details regarding the term loan offering.

The Company anticipates closing the second tranche of U.S. $500,000 from companies associated with the CEO and a Director of the Company (together, the "Lenders"). Management anticipates that the Company will allocate the net proceeds from the Loans towards production costs, supplier payments, payroll and working capital.

As an inducement for the Loans, the Company will issue non-transferable share purchase warrants (each, a "Loan Bonus Warrant") to one of the Lenders, with the number of Loan Bonus Warrants to be determined by the principal amount of the applicable Loan divided by the Market Price (as such term is defined in the Policies of the TSX Venture Exchange)(the "Market Price"). Each Loan Bonus Warrant will entitle the holder to purchase one common share of the Company (each, a "Share") at an exercise price equal to the Market Price of the Shares on the closing date for a period of twenty-four (24) months. In addition, two Lenders will be issued Shares (each a "Loan Bonus Share"), with the number of Loan Bonus Shares to be determined by taking 20% of principal amount of the applicable Loans divided by the Market Price.

The Lenders are each considered to be a "related party" within the meaning of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101") and each of the Loans and issuance of Loan Bonus Warrants and Loan Bonus Shares, as applicable, is considered to be a "related party transaction" within the meaning of MI 61-101 but each is exempt from the formal valuation requirement and minority approval requirements of MI 61-101 by virtue of the exemptions contained in section 5.5(a) and 5.7(a) as the fair market value, in each case, of the Loans, the Loan Bonus Warrants and the Loan Bonus Shares, as applicable, is not more than 25% of the Company's market capitalization.

All securities issued in connection with the Loans will be subject to a statutory hold period of four months plus a day from the closing of the Initial Loan in accordance with applicable securities legislation.

For further information contact:

Fraser Atkinson, CEO
(604) 220-8048

Brendan Riley, President
(510) 910-3377

Michael Sieffert, CFO
(604) 563-4144

About GreenPower Motor Company Inc.
GreenPower designs, builds and distributes a full suite of high-floor and low-floor all-electric medium and heavy-duty vehicles, including transit buses, school buses, shuttles, cargo van and a cab and chassis.  GreenPower employs a clean-sheet design to manufacture all-electric vehicles that are purpose built to be battery powered with zero emissions while integrating global suppliers for key components. This OEM platform allows GreenPower to meet the specifications of various operators while providing standard parts for ease of maintenance and accessibility for warranty requirements. GreenPower was founded in Vancouver, Canada with primary operational facilities in southern California. Listed on the Toronto exchange since November 2015, GreenPower completed its U.S. IPO and NASDAQ listing in August 2020. For further information go to www.greenpowermotor.com

Forward-Looking Statements

This news release includes certain "forward-looking statements" under applicable Canadian securities legislation that are not historical facts. Forward-looking statements are not based on historical facts, but rather on current expectations and projections about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. These statements generally can be identified by the use of forward-looking words such as "upon", "may", "should", "will", "could", "intend", "estimate", "plan", "anticipate", "expect", "believe" or "continue", or the negative thereof or similar variations. Forward-looking statements in this news release include, but are not limited to, statements with respect to the expectations of management regarding the use of proceeds of the Loan. Although the Company believes that and the expectations reflected in the forward-looking information are reasonable, there can be no assurance that such expectations will prove to be correct. Such forward-looking statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements including that the proceeds of the Loan may not be used as stated in this news release, and those additional risks set out in the Company's public documents filed on SEDAR+ at www.sedarplus.ca and with the United States Securities and Exchange Commission filed on EDGAR at www.sec.gov. Although the Company believes that the assumptions and factors used in preparing the forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this news release, and no assurance can be given that such events will occur in the disclosed time frames or at all. Except where required by law, the Company disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.  ©2025 GreenPower Motor Company Inc. All rights reserved.

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SOURCE GreenPower Motor Company

FAQ

What is the size and purpose of GreenPower Motor's (GP) new term loan?

GreenPower Motor's second tranche term loan is for US$500,000 and will be used for production costs, supplier payments, payroll, and working capital.

Who are the lenders for GreenPower's (GP) new term loan?

The lenders are companies associated with GreenPower's CEO and a Director of the company.

What incentives are being offered with GreenPower's (GP) term loan?

The company is offering non-transferable share purchase warrants to one lender and bonus shares (20% of principal divided by market price) to two lenders.

How long is the hold period for securities issued in GreenPower's (GP) loan transaction?

All securities issued in connection with the loans will have a statutory hold period of four months plus one day from the closing date.