Royal Bank of Canada & EDC Issue Demand Letters and Notice of Enforcement of Security to Vicinity Motor Corp, a North American Supplier of Commercial Electric Vehicles
Rhea-AI Summary
Vicinity Motor Corp (NASDAQ:VEV)(TSXV:VMC), a North American supplier of commercial electric vehicles, has received demand letters from Royal Bank of Canada and Export Development Canada for full payment of outstanding debt balances. RBC demands payment of USD$19,202,242 by August 19, 2024, while EDC demands immediate payment of USD$8,625,000 plus interest. The lenders have provided Notices of Intention to Enforce Security under the Bankruptcy and Insolvency Act (Canada).
Vicinity intends to pursue all available options to resolve these matters while continuing to support its customer base. The company maintained USD$77.8 million in assets as of March 31, 2024, including USD$23.5 million in Property, Plant and Equipment, USD$28.2 million in Inventory, and USD$4.3 million in cash. Vicinity aims to continue trading on NASDAQ and TSX Venture Exchange, subject to compliance with exchange requirements.
Positive
- Vicinity Motor Corp maintains USD$77.8 million in assets as of March 31, 2024
- Over 1,000 Vicinity transit buses are currently in operation across North America
Negative
- Royal Bank of Canada demands payment of USD$19,202,242 by August 19, 2024
- Export Development Canada demands immediate payment of USD$8,625,000 plus interest
- Secured Lenders have provided Notices of Intention to Enforce Security
- Credit facilities were not renewed by Royal Bank and EDC
- Company faces potential enforcement of security or appointment of a receiver
- Lower than anticipated demand for the VMC 1200 model
- Higher than anticipated working capital requirements to support production backlog
- Insufficient support from lenders
Insights
This news is highly concerning for Vicinity Motor Corp (VEV). The demand for
VEV's
The issuance of demand letters and Notices of Intention to Enforce Security under the Bankruptcy and Insolvency Act is a critical legal development. This initiates a formal process that could lead to receivership or bankruptcy proceedings. Vicinity's statement about pursuing "all available options afforded by law" suggests they may seek protection under the Companies' Creditors Arrangement Act (CCAA) to restructure.
The discrepancy in debt figures (
Vicinity's situation reflects broader challenges in the EV industry, particularly for smaller players. The company cites "lower than anticipated demand for the VMC 1200" and "continued supply chain impacts," indicating market penetration difficulties and operational hurdles. With over 1,000 buses in operation, Vicinity has established a presence, but scaling production and managing working capital have proven problematic.
The EV transition, while promising long-term, is causing short-term volatility. Vicinity's struggles highlight the capital-intensive nature of the industry and the importance of robust financial backing. This case may lead to increased investor scrutiny of other small EV manufacturers' financials and production capabilities, potentially affecting valuations across the sector.
Vicinity Intends to Pursue All Available Options Afforded by Law to Resolve These Matters While Continuing to Support its Customer Base
VANCOUVER, BC / ACCESSWIRE / August 9, 2024 / Vicinity Motor Corp. (NASDAQ:VEV)(TSXV:VMC) ("Vicinity" or the "Company"), a North American supplier of commercial electric vehicles, today announced it has received letters from Royal Bank of Canada ("Royal Bank") and Export Development Canada ("EDC") (the " Secured Lenders") which demand full payment of the outstanding debt balances under their respective credit facilities. Royal Bank has demanded payment by August 19, 2024 and EDC has demanded immediate payment. RBC indebtedness totals USD
In addition, the Secured Lenders have provided Vicinity with Notices of Intention to Enforce Security pursuant to subsection 244(1) of the Bankruptcy and Insolvency Act (Canada). The Company will engage in discussions with its creditors to evaluate potential solutions to enable the Company to carry on in some form in the future; however, there can be no assurances it will be able to successfully do so. The Secured Lenders may enforce their security and/or a receiver or receiver manager may be appointed. Vicinity intends to pursue all available options afforded by law to resolve these matters while continuing to support its customer base.
As disclosed in the Company's publicly filed interim financial statements for the three months ended March 31, 2024, the credit facilities were set be renewed on a yearly basis, at the discretion of the Secured Lenders, on July 16, 2024. The Company had actively been working with Royal Bank and EDC on securing a renewal, but Royal Bank and EDC have exercised their discretion not to renew the credit facilities. As set out in the interim financial statements, as of March 31, 2024 the Company had drawn USD
The Vicinity Board of Directors remains committed to navigating these challenges as it turns a corner during a difficult time in the transition to broader electric vehicle adoption, leveraging the Company's position as a respected Canadian EV and transit bus OEM providing significant public benefit. Today there are more than 1,000 Vicinity transit buses in operation across North America and Vicinity recognizes this responsibility to support and maintain the critical transportation infrastructure that allows North America's families to fulfill their travel responsibilities.
The Company maintained USD
The Company intends for trading of the Company's common shares to continue on the NASDAQ and TSX Venture Exchange, subject to compliance with applicable exchange requirements.
About Vicinity Motor Corp.
Vicinity Motor Corp. (NASDAQ:VEV)(TSXV:VMC) ("VMC") is a North American supplier of electric vehicles for both public and commercial enterprise use. The Company leverages a dealer network and close relationships with world-class manufacturing partners to supply its flagship electric, CNG and clean-diesel Vicinity buses, as well as the VMC 1200 electric truck to the transit and industrial markets. For more information, please visit www.vicinitymotorcorp.com.
Company Contact:
John LaGourgue
VP Corporate Development
604-288-8043
IR@vicinitymotor.com
Investor Relations Contact:
Lucas Zimmerman
MZ Group - MZ North America
949-259-4987
VMC@mzgroup.us
www.mzgroup.us
Neither the TSX-V nor its Regulation Service Provider (as that term is defined in the policies of the TSX-V) accepts responsibility for the adequacy or accuracy of this release.
Cautionary Note Regarding Forward-Looking Statements
This press release includes certain "forward-looking information" and "forward-looking statements" (collectively "forward-looking statements") within the meaning of applicable securities laws. All statements, other than statements of historical fact, included herein are forward-looking statements. Forward-looking statements are frequently, but not always, identified by words such as "expects", "anticipates", "believes", "intends", "estimates", "potential", "possible", and similar expressions, or statements that events, conditions, or results "will", "may", "could", or "should" occur or be achieved. In particular, and without limitation, this news release contains forward-looking statements regarding the continuation of trading of the Company's common shares on the NASDAQ and TSX Venture Exchange, and the success of the Company's discussions with its creditors to evaluate potential solutions to enable the Company to carry on. Forward-looking statements involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements.
Important factors that could cause actual results to differ materially from Vicinity's expectations include uncertainties relating to the economic conditions in the markets in which Vicinity operates, vehicle sales volume, anticipated future sales growth, the success of Vicinity's operational strategies, production prospects at Vicinity's assembly facility in the State of Washington, the success of Vicinity's strategic partnerships, the ability to continue as a going concern; and other risk and uncertainties disclosed in Vicinity's reports and documents filed with applicable securities regulatory authorities from time to time. Vicinity's forward-looking statements reflect the beliefs, opinions and projections on the date the statements are made. Vicinity assumes no obligation to update the forward-looking statements or beliefs, opinions, projections, or other factors, should they change, except as required by law.
SOURCE: Vicinity Motor Corp.
View the original press release on accesswire.com
FAQ
What is the total debt demanded by Royal Bank of Canada and Export Development Canada from Vicinity Motor Corp (VEV)?
By when does Royal Bank of Canada demand payment from Vicinity Motor Corp (VEV)?
What actions have the Secured Lenders taken against Vicinity Motor Corp (VEV)?
What was the total asset value of Vicinity Motor Corp (VEV) as of March 31, 2024?
How many Vicinity transit buses are currently in operation across North America?
