MONTREAL - The Lion Electric Company (NYSE: LEV) (TSX: LEV), known for manufacturing all-electric urban vehicles, has entered into a definitive agreement to sell its Mirabel, Québec innovation center to Aéroport de Montreal. The transaction, valued at C$50 million, is subject to customary adjustments and closing conditions. According to InvestingPro data, the company currently operates with a total debt of $388 million and has been quickly burning through cash, making this sale particularly significant for its financial stability.
This strategic sale is aimed at addressing the company's financial commitments by allocating the net proceeds to partially repay its senior secured non-convertible debentures, issued in July 2023. The debenture holders currently have a first ranking hypothec over the real rights related to the innovation center. The transaction is not expected to influence Lion Electric's short-term liquidity or cash position but will contribute to reducing long-term debt. With a concerning debt-to-equity ratio of 1.38 and negative EBITDA of $86.6 million in the last twelve months, this debt reduction appears crucial for the company's sustainability.
The closing of the deal is anticipated before the end of 2024, pending the satisfaction of standard closing conditions.
Lion Electric is a leader in North American electric transportation and actively seeks to innovate with zero-emission vehicles, including electric school buses. The company's shares are traded on both the New York Stock Exchange and the Toronto Stock Exchange under the ticker symbol LEV. InvestingPro analysis reveals the stock has experienced significant volatility, with a 78% decline year-to-date and currently trades at just 0.32 times book value. Get access to 18 additional InvestingPro Tips and comprehensive financial analysis through the Pro Research Report, available exclusively to subscribers.
The press release included forward-looking statements that are subject to risks, uncertainties, and assumptions, which could cause actual results to differ materially from those projected. These statements are based on management's estimates, which they believe to be reasonable, but there is no assurance that the anticipated outcomes will be realized. Lion Electric has also disclosed material uncertainty in its interim management's discussion and analysis that may cast significant doubt on the company's ability to continue as a going concern. This concern is reflected in InvestingPro's Financial Health Score of 1.49, labeled as "WEAK," with negative returns on assets of -16% and concerning gross profit margins.
The information for this article is based on a press release statement from The Lion Electric Company.
In other recent news, Lion Electric has had its stock price target revised by BMO Capital Markets due to a year-over-year decline in volumes and ongoing profitability issues. The new price target stands at $0.60, down from the previous $0.80, while the Market Perform rating remains unchanged. The Canadian company has also been facing delays in its funding program despite new opportunities, contributing to its financial challenges.
Lion Electric recently reported its Q3 2024 results, highlighting cost-saving measures and operational streamlining initiatives expected to result in annual cost savings of around $65 million. These measures include headcount reductions and a shift to a batch-size manufacturing approach in its truck business to align production with customer demand.
These recent developments underscore Lion Electric's strategic efforts to improve its liquidity position and lay a sustainable foundation for future growth. Despite the need for workforce reductions, the management team remains optimistic about the company's future.
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