The deadline passed for Lion Electric Company to repay loans needed to overcome hundreds of millions in debt, but the school bus manufacturer is not heading into bankruptcy, a company spokesperson said.
The statement made to School Transportation News on Tuesday came amid a Lion press release earlier in the day that highlighted use of the Companies Credit Arrangement Act (CCAA), a Canadian federal law dating back to 1933 that allows insolvent companies to avoid liquidation. This occurs through court-directed compromise or arrangement made by a debtor company and its secured creditors.
In the press release, Lion said it “is currently in discussions with its senior lenders to obtain additional funds pursuant to a new debtor-in-possession credit facility and expects to seek creditor protection” under the CCAA as it seeks to restructure its business and financial affairs. Lion added it pursues a formal sales and investment solicitation process for the company’s business or assets.
The Lion spokesperson referred to the CCAA proceedings as a “stable and structured environment” for various restructuring measures under a Revolving Credit Agreement with two lenders represented by the National Bank of Canada and a loan agreement with Finalta Capital Fund that expired on Monday. No timeline was given for when the CCAA agreements will be finalized.
On Dec. 1, Lion announced the latest of four amendments to the Revloving Credit Agreement and an extension of the Finalta Capital loan agreement, a halt to all production at its manufacturing plant in Joliet, Illinois, and the laying off an additional 400 workers on top of the 120 employees laid off in April. The company has trimmed its workforce from nearly 1,300 employees to about 300.
A separate SEC filing that same day announced the Nicolas Brunet resigned as president.
Four days later, Lion said it reached an agreement to sell its Quebec innovation center for $35 million U.S. The company noted in its third-quarter financial results total liabilities of $500 million and a net loss of nearly $75 million as of Sept. 30.
Related: Brunet Resigns as Lion Electric President Amid Company Battle to Stay Solvent
Related: Updated: Lion Electric Suspends Manufacturing Operations at Joliet Plant
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