The auction of electric school bus and truck manufacturer Lion Electric Company is moving forward after a last-ditch effort to obtain government funding from the province of Quebec fell through.
Christine Fréchette, Quebec’s minister of economy, innovation and energy, posted on X last week that the Quebec government will not reinvest in Lion after passing on a recovery plan that was submitted to save the manufacturer but on a limited scale.
“This is a difficult, but responsible decision. It’s a local company that offers an innovative product that contributes to the energy transition. The government has a responsibility to support the growth of Quebec businesses,” she posted. “We believed in Lion’s potential, but the submitted recovery plan did not justify the re-injection of significant government sums. Unfortunately, one thing is clear: Granting new funds to Lion Electric would not be a responsible decision.”
On Monday in a Quebec court, a representative of Deloitte that is overseeing the insolvency said without the additional funding all remaining Lion assets will need to be sold.
The court lifted a stay on the auction managed by Deloitte may proceed after issuing a stay in March while Lion sought the additional funding.
The company reportedly owes $244 million to secured and non-secured creditors. A Lion Electric spokesman had no comment when asked by School Transportation News.
Bloomberg News reported that an investment group created the recovery plan that would have resulted in Lion Electric only manufacturing electric school buses going forward out of its St. Jerome plant. But the province already lost $128 million U.S. in investments into Lion with the Canadian federal government losing another $30 million U.S. Ottawa had also invested in Lion.
Public Money at Risk in Lion Electric:
o 2021: $19 million Canadian from Investissement Québec (IQ) to purchase shares
o 2021: $37 million from a loan offered by Quebec for the battery pack plant
o 2021: $21 million from the Ottawa loan for the battery pack complex
o 2022: $15 million in a loan from the Caisse de dépôt et placement du Québec
o 2023: $98 million loaned by IQ, the Fonds de solidarité FTQ, and Fondaction CSN
o 2024: $7.5 million in a loan from the Quebec governmentSource: La Presse
Power Corp. of Canada, according to Bloomberg, was the largest Lion shareholder with a 34-percent stake but has already written down its Canadian $81 million position in the company to zero.
Montreal-based online newspaper La Presse broke the news Wednesday, reporting that an unnamed U.S. investment firm expressed serious interest in purchasing the Lion assets, but the Quebec proposal had been the most promising.
La Presse also reported that Lion will likely be sold off in parts, which would mean the end of the company. It laid off all its employees, including those in the U.S., and ceased operations except for a select few senior executives working out of Quebec to try and salvage the company. Deloitte is overseeing the the company’s insolvency proceedings and an auction of its assets.
There are about 2,000 Lion Electric school buses at school districts and school bus companies across North America that will need maintenance and customer service going forward.
This is a developing story.
Related: Lion Electric Customers Have Options Despite Insurmountable Debit Forcing the Manufacturer to Auction
Related: Update: Lion Electric Defaults on Credit Repayment, Says It is Avoiding Bankruptcy
Related: Brunet Resigns as Lion Electric President Amid Company Battle to Stay Solvent
