Monday’s regulatory filing indicates that California-based EV manufacturer Fisker intends to sell $340 million in convertible debt. The company anticipates net proceeds of $296.7 million, with the amount reduced by a 12% issue discount and other fees. The due date for the notes is 2025.
Fisker intends to use the funds to support its general corporate operations and to add a new battery pack line to “support growth” beyond 2024. The funds will also be used for capital expenditures and the development of future products, according to the company.
The stock price initially declined in pre-market trading but has since recovered. In late-afternoon trading, shares climbed 12.3% to $6.74.
Fisker is attempting to scale up the production of its first electric vehicle amidst a tightening capital environment for startups when it sells convertible debt. Fisker is one of several electric vehicle (EV) manufacturers that went public through a merger with a special-purpose acquisition company.
The overwhelming majority of once-soaring EV SPACs, whose share prices spiked in 2021 and 2022, have since declined due to cash shortages. Several have declared bankruptcy, while others scramble to reduce expenses and raise capital.
Fisker has essentially avoided the issues encountered by its EV SPAC competitors. However, it still faces headwinds and a cash drain from designing, producing, and selling vehicles, whether or not they are EVs.
In May of this year, Fisker delivered its first all-electric SUV, the Ocean, to Danish consumers and in June to U.S. buyers. However, production constraints have reduced the company’s profitability.
Fisker reported earlier this month that it produced 1,022 Ocean SUVs in the second quarter, falling short by several hundred vehicles of its own projections. The company attributed its shortfall to a lack of components from its sub-suppliers. Fisker stated that it is collaborating with all suppliers to achieve the required production volumes.