Phoenix Motor Strengthens Capital Structure by Negotiating Key Waiver with Note Holder

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Phoenix Motor Inc. (NASDAQ:PEV) strengthens its capital structure by negotiating a key waiver with note holder JAK Opportunities II , eliminating a potential $12 million convertible promissory note issuance. The agreement prevents dilution of existing shares, showcasing investor confidence in the company's operational strategy and financial health. CEO Denton Peng expresses gratitude towards JAK Opportunities for fortifying the capital structure, enabling accelerated growth initiatives without further dilution. Phoenix Motor plans to utilize the enhanced capital flexibility to expand product lines, increase market penetration in the EV industry, scale up production capabilities, and innovate in electrification solutions for transit buses and medium-duty vehicles.

Financial Analyst

Phoenix Motor's negotiation with JAK Opportunities to waive the potential issuance of a $12 million convertible promissory note underscores a strategic financial maneuver. By sidestepping this convertible debt, the company is effectively preventing the dilution of existing shareholder equity. This move suggests Phoenix Motor is confident in its liquidity position and current capital structure, which could be indicative of the company's sound financial management and future prospects.

Typically, a convertible note is a form of short-term debt that can be converted into equity, usually at a later date. The decision to avoid this pathway not only preserves current shareholder value but also implies that the company may have better funding options available, or it expects sufficient cash flow to fund its operations and growth initiatives. Investors might view this as a positive signal, reinforcing the company's narrative of financial stability and operational confidence.

Automotive Industry Analyst

Phoenix Motor's focus on expanding their product lines and increasing market penetration in the EV industry comes at a critical juncture in the automotive sector. The shift towards electric vehicles is gaining momentum and companies like Phoenix that are enhancing their capital flexibility to scale up production capabilities are positioning themselves advantageously. The waived note issuance indicates a broader strategic emphasis on resource allocation towards innovation and growth within this high-potential market.

As investors assess Phoenix Motor's strategic moves, the commitment to innovation in transit buses and medium-duty vehicle electrification solutions is of particular interest. The company's ability to forgo additional debt to fund these initiatives could be a reflection of strong underlying demand for its products, as well as an effective operational strategy that aligns with wider industry trends towards sustainability and electrification.

ANAHEIM, CA / ACCESSWIRE / April 25, 2024 / Phoenix Motor Inc. (NASDAQ:PEV) (the "Company"), a leading manufacturer of heavy-duty transit buses and electrification solutions provider for medium-duty vehicles, today announced it signed a waiver agreement with JAK Opportunities II LLC, one of the Company's principal investors, eliminating a potential $12 million convertible promissory note issuance related to a Securities Purchase Agreement (SPA) signed in November 2023.

"Recent capital raising activities have provided us with a solid foundation to accelerate our growth initiatives while eliminating the need to incur further dilution related to the SPA," said Denton Peng, CEO of Phoenix Motor. "We want to thank JAK Opportunities for working with our team to reach an agreement that strengthens our capital structure and enhances overall shareholder value."

"The waiver agreement not only prevents dilution of existing shares but also reflects the strong confidence our investors place in our operational strategy and our financial health," added Peng. "The eliminated obligation to issue the note is a testament to the effectiveness of our ongoing efforts to optimize our capital structure and strategically allocate resources towards growth and innovation in the rapidly evolving EV space."

Looking ahead, Phoenix Motor is poised to leverage its enhanced capital flexibility to expand its product lines and increase market penetration in key segments of the EV industry, including scaling up production capabilities and continuing to innovate in the design and functionality of the Company's electrification solutions for both transit buses and medium-duty vehicles.

About Phoenix Motor Inc.

Phoenix Motor, a pioneer in the electric vehicle ("EV") industry, designs, builds, and integrates electric drive systems and manufactures heavy duty transit buses and medium and light duty commercial EVs. Phoenix operates two primary brands, "Phoenix", which is focused on commercial products including heavy and medium duty EVs (transit buses, shuttle buses, school buses and delivery trucks, among others) and "EdisonFuture", which intends to offer light-duty EVs. Phoenix endeavors to be a leading designer, developer and manufacturer of electric vehicles and electric vehicle technologies. To learn more, please visit: www.phoenixmotorcars.com.

Forward-Looking Statements

This press release contains forward-looking statements, as that term is defined in the Private Litigation Reform Act of 1995, that involve significant risks and uncertainties. Forward-looking statements can be identified through the use of words such as "may," "might," "will," "intend," "should," "could," "can," "would," "continue," "expect," "believe," "anticipate," "estimate," "predict," "outlook," "potential," "plan," "seek," and similar expressions and variations or the negatives of these terms or other comparable terminology. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect the Company's current expectations and speak only as of the date of this release. Actual results may differ materially from the Company's current expectations depending upon a number of factors. These risk factors include, among others, those related to our ability to raise additional capital necessary to grow our business, operations and business and financial performance, our ability to grow demand for our products and revenue, our ability to become profitable, our ability to have access to an adequate supply of parts and materials and other critical components for our vehicles on the timeline we expect, the coronavirus (COVID-19) and the effects of the outbreak and actions taken in connection therewith, adverse changes in general economic and market conditions, competitive factors including but not limited to pricing pressures and new product introductions, uncertainty of customer acceptance of new product offerings and market changes, risks associated with managing the growth of the business, and those other risks and uncertainties that are described in the "Risk Factors" section of the Company's annual report filed on Form 10-K filed with the Securities and Exchange Commission. Except as required by law, the Company does not undertake any responsibility to revise or update any forward-looking statements.

Contact:
marketing@phoenixmotorcars.com
Dave Gentry, CEO
RedChip Companies, Inc.
1-407-644-4256
PEV@redchip.com

SOURCE: Phoenix Motorcars Inc.

View the original press release on accesswire.com

FAQ

What did Phoenix Motor announce regarding its capital structure?

Phoenix Motor Inc. announced that it strengthened its capital structure by negotiating a key waiver with note holder JAK Opportunities II , eliminating a potential $12 million convertible promissory note issuance.

Who is the principal investor that Phoenix Motor signed a waiver agreement with?

Phoenix Motor signed a waiver agreement with JAK Opportunities II , one of the Company's principal investors.

How does the waiver agreement impact existing shares of Phoenix Motor?

The waiver agreement prevents dilution of existing shares of Phoenix Motor, showcasing investor confidence in the company's operational strategy and financial health.

What does Denton Peng, the CEO of Phoenix Motor, say about the agreement with JAK Opportunities?

Denton Peng expressed gratitude towards JAK Opportunities for working with the team to reach an agreement that strengthens the company's capital structure and enhances overall shareholder value.

How does Phoenix Motor plan to utilize its enhanced capital flexibility?

Phoenix Motor plans to utilize its enhanced capital flexibility to expand its product lines, increase market penetration in the EV industry, scale up production capabilities, and innovate in electrification solutions for transit buses and medium-duty vehicles.