Lion Électrique is selling its innovation center near its lithium-ion battery plant in Mirabel for $50 million to Aéroports de Montréal to help manage its financial difficulties. Despite this asset sale, the company faces significant debt and has announced 400 temporary layoffs, highlighting ongoing challenges. The proceeds will primarily be used to repay part of a $142 million loan, while ADM plans to repurpose the facility as an aerospace innovation hub.
Lion Électrique’s Strategic Shift: Selling Innovation Center
In a significant turn of events, Lion Électrique has decided to sell its innovation center adjacent to its recently inaugurated lithium-ion battery plant in Mirabel. This move comes a year and a half after the plant’s grand opening and is aimed at addressing the company’s financial struggles. The deal, valued at $50 million, has been agreed upon with Aéroports de Montréal (ADM).
According to financial analyst Rupert Merer from the National Bank, this asset sale represents an important initial step for Lion to alleviate its debt burden. However, he cautions that additional funding will be necessary to sustain the company’s operations, which could potentially lead to an overall sale of the business.
Financial Challenges Ahead for Lion Électrique
Despite the sale, Lion’s financial situation remains precarious. The proceeds will not significantly boost the company’s cash reserves, as the entirety of the sale amount will be directed towards repaying part of the $142 million loan secured in June 2023 from various lenders, including Investissement Québec (IQ).
In a press release, Lion acknowledged that while this transaction is expected to lower the company’s long-term debt, it will not enhance its immediate cash flow or liquidity. Meanwhile, ADM plans to transform the acquired facility into an aerospace innovation hub, with CEO Yves Beauchamp expressing confidence in the site’s strategic location and suitability for their needs.
Additionally, Lion Électrique faces pressing financial obligations, including a critical $22 million US loan due to the Caisse de dépôt et placement du Québec (CDPQ) and Finalta by mid-December, along with another bank loan totaling $117 million.
In light of these developments, the company recently announced 400 temporary layoffs, accounting for half of its workforce, indicating the severity of its current challenges. Former employees have voiced concerns regarding the leadership’s experience and decision-making, with some describing Lion as primarily a financial entity that needed a product to leverage public subsidies.
Despite the hurdles, a spokesperson for Lion, Patrick Gervais, defended the company’s commitment to quality, stating that rigorous tests are conducted in partnership with third-party organizations to ensure all vehicles meet certification standards.
A Timeline of Lion Électrique’s Journey
To better understand the trajectory of Lion Électrique, here’s a brief timeline of key events:
- July 2008: Autobus Lion is founded by former leaders of a bus manufacturing company.
- November 2017: Power Corporation acquires a 43.8% stake in Lion through a significant investment.
- May 2021: Lion Électrique goes public, raising $200 million US on major stock exchanges.
- November 2021: CEO Marc Bédard sells $16.5 million worth of shares at an average price of $14.85.
- December 2022: The company delivers its first bus from its Illinois plant, which remains underutilized.
- April 2023: Lion opens its battery plant in Mirabel, which currently operates at excess capacity.
- July 2023: The company secures $142 million US in funding, primarily from Quebec sources.
- July 2024: Lion announces layoffs of 300 workers, adding to previous job cuts.
This overview illustrates the challenges faced by Lion Électrique, a company that has heavily relied on public funding throughout its history, as it navigates a complex financial landscape.