Fisker Hits the Brakes on Production Amid Financial Restructuring
In a strategic move to stabilize its financial footing, electric vehicle startup Fisker Inc. (FSR.N) announced on Monday a temporary halt in production and an initiative to raise capital. The company is seeking up to $150 million through the sale of convertible notes after it missed a crucial interest payment, signaling a period of recalibration for the aspiring EV manufacturer.
Fisker’s production pause comes on the heels of a production shortfall, with no Ocean SUVs rolling off the line in January. Its manufacturing partner, Magna’s Austrian unit (MG.TO), managed to produce approximately 1,000 vehicles from the start of February to mid-March. Despite these challenges, Fisker reported deliveries of about 1,300 vehicles in 2024 and holds over $200 million in inventory value.
The financing maneuver involves issuing senior secured convertible notes at a 10 percent original issue discount, potentially generating gross proceeds of up to $150 million. CVI Investments, operating through Heights Capital Management, and a Warsaw-based investment fund are set to convert the debt into Fisker equity, as per filings with the US Securities and Exchange Commission.
Interestingly, Fisker chose not to make a $8.4 million interest payment due on March 15 for certain convertible notes maturing in 2026. The company cited sufficient liquidity but opted for a 30-day grace period to negotiate its capital structure with investors. As of last Friday, Fisker’s cash reserves had dwindled to $120.9 million from $395.9 million at the end of the previous year.
Amid these financial maneuvers, Fisker reaffirmed ongoing discussions with a major automaker for a potential partnership, though the identity of the automaker remains undisclosed. This follows Reuters’ earlier report about Nissan (7201.T) being in advanced talks to invest in Fisker, potentially providing a much-needed financial lifeline.
Fisker has also shifted its sales strategy from direct-to-customer to leveraging dealerships amidst distribution and servicing challenges. The company expressed significant concerns regarding its operational continuity in February and has since frozen investments in future projects pending a solidified automaker partnership.
As Fisker navigates through this critical juncture, industry observers and investors alike are closely monitoring the company’s strategic decisions and their implications for the future of this ambitious entrant in the electric vehicle market.
