E-bus manufacturer Proterra is insolvent
Proterra is insolvent. The Californian company is one of the leading manufacturers of electric buses for local public transport. In addition, Proterra supplies accumulators based on LG cells for other heavy vehicles as well as charging infrastructure for heavy vehicle fleets. On Monday, the company filed for Chapter 11 bankruptcy protection.
As a result, Proterra shares plummeted 87 percent on Tuesday. The embellished headline of the announcement didn’t help either: “Proterra Announces Strategic Initiatives to Strengthen Financial Position and Sharpen Technology Focus”. Incidentally, there is no mention of insolvency proceedings on the company’s own website.
The filings with the court show that Proterra has more than 5,000 creditors and owes them a total of $0.5 billion to $1 billion. The assets should be in the same range. The announcement of the quarterly figures scheduled for Wednesday has been cancelled.
Another SPAC bankruptcy
The company, which was founded in 2004, has been a penny stock since Tuesday – and joins the long line of losing SPACs. Because Proterra did not undertake a classic IPO with the public sale of shares at a fixed price (Initial Public Offering, IPO), but got its stock market listing in June 2021 through a merger with a so-called SPAC (Special Purpose Acquisition Company). For Proterra it was faster and cheaper.
A SPAC is formed solely to collect money from investors, then list without actual business activity on the stock exchange, and finally merge with an unlisted company. That was en vogue around 2020. However, SPACs only have two years to buy another company or investors get their money back. This time pressure, and the well-known purchase budget, are perhaps not the ideal basis for rich-making investments.
Over 1,000 electric buses sold
Since 2010, Proterra has been trying to convince public transport operators that e-buses are the future. As of the end of March this year, Proterra has delivered over 1050 electric buses that have clocked up more than 40 million miles. Since 2018, the company has supplied other manufacturers with batteries for more than 1875 vehicles, construction and mining equipment. Since 2013, it has installed more than 1,000 charging stations with a total capacity of over 100 megawatts. Examples are 4.3 megawatts in Edmonton, Canada, or 9 megawatts in Miami, each for the public transport operators there.
Proterra is now looking for new financiers or a buyer who would like to continue the company. For now, operations will continue pending the Delaware bankruptcy court’s approval of access to any remaining funds. After all, Proterra has to pay employees and suppliers. However, CEO Gareth Joyce would like to separate the different operations to “maximize their individual potential.” account separately from now on. At the beginning of the year, the company laid off 300 employees and decided to close the production site in California by the end of the year. Then Proterra only wanted to produce in South Carolina.
“Although our electric vehicles and battery technology are industry leaders, we have faced various headwinds in the market and economic environment,” says the CEO. “This has impacted our ability to efficiently scale all of our capabilities simultaneously.” Proterra joins the long list of electric vehicle companies that have gone bankrupt.
Lordstown quarrels with Foxconn, goes bankrupt without debt
Lordstown Motors, manufacturer of the electric pickup Endurance, only filed for bankruptcy protection at the end of June. Lordstown had been in crisis for years; In 2021, after pre-orders evaporated, the CEO and CFO of Lordstown Motors were fired and plans for an electric van were shelved.
This year, a $170 million investment by Taiwan’s Foxconn should turn the tide. In April, however, Foxconn tried to get out of the contract under a pretext, after which Lordstown filed a lawsuit. But court proceedings like this take time. So, at the end of June, they fled to bankruptcy protection. What is unusual is that the company states that it is debt-free and still has money on hand – but apparently not enough to cover existing obligations.
Incidentally, Lordstown Motors also went public through a merger with a SPAC. That was in October 2020 when money was still free.
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