Electric vehicle company in trouble Arrival secured a $300 million lifeline to help it stay in business through the end of 2023, but no later. The company is seeking additional dedicated funding to develop the XL delivery truck for the U.S. market and begin production in Charlotte, North Carolina in 2024.
Arrival announced a $300 million equity funding stream from Westwood Capital at its fourth-quarter and full-year 2022 earnings call on Monday. The company also scheduled an Extraordinary General Meeting of Shareholders on April 6 to vote on a number of resolutions, including a reverse stock split to support the company. regain compliance with Nasdaq.
Come already original reported income last week, but delayed holding a call with analysts until today to finalize the Westwood transaction. And to be fair, considering how red the Arrival is.
The company was already burning cash at an astonishing rate, but it was still willing to make more money. Arrival may have wanted to exploit as little of Westwood’s fountain as possible, fearing it would strip away too much equity. John Wozniak, Arrival’s chief financial officer, said the company hopes to raise an additional $500 million — $100 to $150 million by the end of the year — to fund the XL program. Arrival hopes the additional liquidity, the promise of XL trucks with high potential margins and further cost-cutting measures will make it an attractive target for investors. investment this year, despite numerous past failures to meet production deadlines.
The business update comes less than two months after Igor Torgov, Arrival’s former chief executive, come in as the CEO of the company. Torgov replaces interim CEO Peter Cuneo, who was appointed in November 2022 when Denis Sverdlov, founder of Arrival, stepped down. Torgov immediately took drastic cost-cutting measures, including sale 50% of staff will be competitive by the end of March 2023 and will leave Arrival with less than 800 employees.
In February, Arrival secured up to $50 million in new equity through the sale of common stock to Antara Capital Master Fund, helping the company reduce its net debt by $121.9 million.
Now, as part of Arrival’s new business plan, the company intends to reduce its target cash spending to no more than $35 million per quarter. Arrival has simplified its global size and real estate footprint to focus on the US market, and has moved away from several rental locations. The company has also implemented a hiring and spending freeze, including restrictions on all new purchase commitments.
Guaranteed funding for the production of XL vans in the US
Arrival has focused all its efforts on its product strategy in the US since the third quarter, when the company decided to withdrawn from its Bicester productionUK microfactory and directed resources instead to build a microfactory in Charlotte.
“The larger market size for commercial vehicles in the U.S. combined with higher average selling prices and margins and an IRA tax credit of up to $40,000 for,” Wozniak told an audience on Monday. each vehicle creates an extremely attractive opportunity for electric commercial vehicles in the United States.
Arrival says $500 million will help it invest in supplier prototype and manufacturing tools, complete equipment procurement and installation, and provide working capital to start van production. XL – purpose-built for last-mile deliveries – in the US by the end of 2024.
In the meantime, Arrival is still working on building the 10 L truck at its facility in Bicester in August — they’ve built two so far. The goal is to further develop the highly automated factory processes that Arrival has promised will set their microfactory apart from the standard large assembly line model. UK-made lorries will also be used to accrue 250,000 kilometers of public mileage to validate Arrival designs and engineering by the end of 2023.
“Due to the highly convertible, technical components and solutions from the Bicester L to the XL van, we had a pretty good start in terms of XL van engineering in design,” says Wozniak. “Although the vehicles are obviously different sizes, virtually all components of the control system and low voltage have been carried. Similarly, technical solutions for the body structure, interior sealing elements and some chassis systems have also been transferred to the Bicester L.”
Reverse stock split
Last November, There is an unlisting warning from Nasdaq because its shares are under-traded. Shares came to close on Monday at $0.18, but rose to $0.20 after the business update. The company will ask shareholders to vote next month on a proposed reverse stock split with a consolidation ratio between 30:1 and 50:1 to help the company regain compliance with Nasdaq.
At the general meeting, Arrival will also ask shareholders to vote on the proposed capital reduction to $156,532.22 without canceling the shares or paying the shareholders, which would bring the value of the shares up. of the company at about $0.0002 per share prior to the stock split reversal.
