In a recent regulatory filing, Fisker revealed that the automaker terminated its negotiations with a large automaker, reportedly Nissan, over a potential investment and collaboration. This development puts a separate near-term rescue funding effort in danger.
Why the Negotiations Were Terminated
The company did not provide any explanation for why the negotiations were terminated on March 22. However, Fisker had to continue the discussions as part of one of the closing conditions for a potential $150 million convertible note announced last week. As a result, the startup will now ask the unnamed investor to waive the closing condition.
Impact on Fisker’s Stock
The news sent shockwaves through the market, with Fisker’s stock plummeting 28% after the stock market opened. Trading was halted as investors scrambled to understand the implications of this development. This is just the latest in a series of ominous signs for the imperiled EV startup.
Fisker’s Ongoing Struggles
Fisker has been struggling to sell its Ocean SUV, underperforming its own internal sales goals. The company had to pivot away from a direct sales model due to this underperformance. Furthermore, some of the cars that have been delivered have been affected by quality problems that Fisker has struggled to solve.
Recent Layoffs and Financial Woes
In February, Fisker laid off 15% of its staff (around 200 people) as part of a cost-cutting measure. The company also reported having just $121 million in the bank last week, warning investors that it would not survive a year without a fresh infusion of cash.
Production Pause and Future Uncertainty
Fisker has paused production and is evaluating other "strategic alternatives" to the potential tie-up with Nissan. These alternatives include:
- In-or-out-of-court restructurings: Fisker may consider restructuring its operations through a court-appointed process or an out-of-court agreement.
- Capital markets transactions: The company could issue new debt or equity securities to raise funds and address its financial challenges.
- Repurchases, redemptions, exchanges, or other refinancings of existing debt: Fisker may attempt to refinance its existing debt through various means.
- Potential issuance of equity securities: The company could issue new shares to investors in exchange for cash.
- Sale of assets and businesses: Fisker might consider selling off non-core assets or business units to raise funds.
- Other strategic transactions and/or measures: The company may explore other options, such as partnerships or joint ventures.
Fisker’s Ongoing Efforts to Secure Funding
The termination of the negotiations with Nissan puts a separate near-term rescue funding effort in danger. Fisker is now focused on securing alternative sources of funding to support its operations and stay afloat.
