LION ELECTRIC ANNOUNCES ADDITIONAL AMENDMENTS TO CERTAIN SENIOR CREDIT INSTRUMENTS AND ADDITIONAL WORKFORCE REDUCTIONS

Rhea-AI Summary

Lion Electric (NYSE: LEV) has secured amendments to its credit agreements, extending the suspension of financial covenants and loan maturity dates to December 16, 2024. The company is actively evaluating restructuring options, including potential business sale, strategic investments, or seeking creditor protection. Additionally, Lion announced a significant workforce reduction of approximately 400 employees through temporary layoffs across Canada and the United States, leaving about 300 employees focused on bus manufacturing, sales, and customer service. The company's Joliet, Illinois facility operations will be suspended as part of these measures.

Positive

• Secured extension of credit agreements to December 16, 2024
• Additional advance approved under Revolving Credit Agreement
• Permission to use portion of receivables for minimum liquidity needs

Negative

• Temporary layoff of 400 employees (57% workforce reduction)
• Suspension of Joliet, Illinois manufacturing operations
• Company exploring creditor protection options
• Potential restructuring or sale of business due to financial difficulties
• Uncertain outcome of restructuring alternatives

Insights

Financial Restructuring Specialist

This is a critical development indicating severe financial distress at Lion Electric. The company is seeking multiple amendments to credit agreements and implementing significant workforce reductions, raising serious concerns about its operational viability. The layoff of 400 employees, reducing the workforce to just 300 and the suspension of operations at the Joliet facility signal a dramatic scaling back of operations.

The extension of covenant suspensions and loan maturity dates to December 16, 2024, coupled with the company actively exploring restructuring options, including potential CCAA protection (Canadian bankruptcy equivalent), suggests an imminent financial crisis. The mention of exploring business sale options and strategic investments indicates management is considering all alternatives for survival. The immediate focus on bus operations while scaling back other activities represents a last-ditch effort to preserve core business functions.

EV Industry Analyst

The severe downsizing and potential restructuring of Lion Electric reflects broader challenges in the commercial EV sector. The reduction to just 300 employees focused on bus operations suggests a strategic pivot to their most viable product line, but raises questions about the company's ability to maintain competitive positioning and product development. The suspension of the Illinois facility operations particularly impacts Lion's ability to serve the U.S. market and execute on existing orders.

This restructuring could create opportunities for competitors to capture market share in the commercial EV space, especially in the school bus segment where Lion has been a significant player. The company's struggles highlight the ongoing challenges of scaling up EV manufacturing while maintaining sufficient working capital.

MONTREAL, Dec. 1, 2024 /PRNewswire/ - The Lion Electric Company (NYSE: LEV) (TSX: LEV) ("Lion" or the "Company"), a leading manufacturer of all-electric medium and heavy-duty urban vehicles, announced today that it has entered into additional amendments to (i) its senior revolving credit agreement entered into with a syndicate of lenders represented by National Bank of Canada, as administrative agent and collateral agent, and including Bank of Montreal and Federation des Caisses Desjardins du Québec (the "Revolving Credit Agreement"), and (ii) its loan agreement entered into with Finalta Capital and Caisse de dépôt et placement du Quebec (the "Finalta CDPQ Loan Agreement"), in order to extend the period applicable to the previously announced suspension of the financial covenants under the Revolving Credit Agreement from November 30, 2024, to December 16, 2024 and extend the maturity date under the Finalta CDPQ Loan Agreement from November 30, 2024 to December 16, 2024.

In furtherance of the amendments, an additional advance will be made under the Revolving Credit Agreement and the Company will be permitted under the Finalta CDPQ Loan Agreement to use a limited portion of the receivables to be received by the Company in order to fund the Company's minimum liquidity needs until December 16, 2024. Such additional liquidity will also provide the Company with additional time to continue to actively evaluate potential alternatives relating to a restructuring of its obligations, a sale of the business or certain of its assets, strategic investments and/or any other alternatives, including seeking creditor protection under the Companies' Credit Arrangement Act. There can be no assurance that the Company will be successful in pursuing and implementing any such alternatives, nor any assurance as to the outcome or timing of any such alternatives.

The Company also announced a reduction of its workforce through temporary layoffs of approximately 400 employees, in both Canada and the United States, across all departments within the organization. Following this workforce reduction, Lion will have approximately 300 employees who will focus on the Company's bus manufacturing, sales and delivery operations as well as assisting customers with the servicing and maintenance of vehicles on the road. The Company's manufacturing operations at its facility located in Joliet, Illinois will also be suspended as a result of this workforce reduction.

ABOUT LION ELECTRIC

Lion Electric is an innovative manufacturer of zero-emission vehicles, including all electric school buses. Lion is a North American leader in electric transportation and designs, builds and assembles many of its vehicles' components, including chassis, battery packs, truck cabins and bus bodies.  

Always actively seeking new and reliable technologies, Lion vehicles have unique features that are specifically adapted to its users and their everyday needs. Lion believes that transitioning to all-electric vehicles will lead to major improvements in our society, environment and overall quality of life. Lion shares are traded on the New York Stock Exchange and the Toronto Stock Exchange under the symbol LEV.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This press release contains "forward-looking information" and "forward-looking statements" within the meaning of applicable securities laws and within the meaning of the United States Private Securities Litigation Reform Act of 1995 (collectively, "forward-looking statements"), including statements regarding the amendments entered into by the Company, potential alternatives relating to a restructuring of the Company's obligations, the Company's evaluation of other potential alternatives, statements about Lion's beliefs and expectations and other statements that are not statements of historical facts. Forward-looking statements may be identified by the use of words such as "believe," "may," "will," "continue," "anticipate," "intend," "expect," "should," "would," "could," "plan," "project," "potential," "seem," "seek," "future," "target" or other similar expressions and any other statements that predict or indicate future events or trends or that are not statements of historical matters, although not all forward-looking statements may contain such identifying words. The forward-looking statements contained in this press release are based on a number of estimates and assumptions that Lion believes are reasonable when made. Such estimates and assumptions are made by Lion in light of the experience of management and their perception of historical trends, current conditions and expected future developments, as well as other factors believed to be appropriate and reasonable in the circumstances. However, there can be no assurance that such estimates and assumptions will prove to be correct. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. For additional information on estimates, assumptions, risks and uncertainties underlying certain of the forward-looking statements made in this press release, please consult section 23.0 entitled "Risk Factors" of the Company's annual management's discussion and analysis of financial condition and results of operations (MD&A) for the fiscal year 2023 and in other documents filed with the applicable Canadian regulatory securities authorities and the Securities and Exchange Commission, including the Company's interim MD&As. Many of these risks are beyond Lion's management's ability to control or predict. All forward-looking statements attributable to Lion or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements contained and risk factors identified in the Company's annual MD&A for the fiscal year 2023 and in other documents filed with the applicable Canadian regulatory securities authorities and the Securities and Exchange Commission. Because of these risks, uncertainties and assumptions, readers should not place undue reliance on these forward-looking statements. Furthermore, forward-looking statements speak only as of the date they are made. Except as required under applicable securities laws, Lion undertakes no obligation, and expressly disclaims any duty, to update, revise or review any forward-looking information, whether as a result of new information, future events or otherwise.

See section 2.0 of the Company's interim management's discussion and analysis for the three and nine months ended September 30, 2024 (the "Interim MD&A"), entitled "Basis of Presentation," section 15.0 of the Company's Interim MD&A entitled "Liquidity and Capital Resources," and note 2 of the Company's unaudited condensed interim consolidated financial statements as at September 30, 2024 and for the three and nine months ended September 30, 2024 and 2023 which indicate the existence of material uncertainty that may cast significant doubt on the Company's ability to continue as a going concern.

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SOURCE The Lion Electric Co.

FAQ

How many employees did Lion Electric (LEV) lay off in December 2024?

Lion Electric announced temporary layoffs of approximately 400 employees across Canada and the United States, reducing its workforce to about 300 employees.

What happened to Lion Electric's (LEV) Joliet facility operations?

Lion Electric suspended manufacturing operations at its Joliet, Illinois facility as part of its workforce reduction measures.

What restructuring options is Lion Electric (LEV) considering?

Lion Electric is evaluating potential restructuring options including business sale, strategic investments, asset sales, and possibly seeking creditor protection under the Companies' Credit Arrangement Act.

When do Lion Electric's (LEV) amended credit agreements expire?

Lion Electric's amended credit agreements have been extended to December 16, 2024.