Fisker (NYSE:FSR) stock is down more than 28% after the electric vehicle (EV) company announced that the large, undisclosed automaker it was engaging in talks with — rumored to be Nissan (OTCMKTS:NSANY) — had terminated the negotiations.
Fisker noted that it would review strategic alternatives, which include a possible in or out of court restructuring, equity issuance, or sale of assets.
As a result of the termination, Fisker will not be able to meet a closing condition with an investor who had agreed to a $150 million financing commitment. Fisker will try to either waive the closing condition or have the investor provide financing on different terms.
“These alternatives involve significant uncertainties, and there can be no assurance that any of these discussions will be successful or that any funds will be available to the Company under the Commitment,” warned Fisker.
FSR Stock: Large Automaker Terminates Negotiations
Reuters previously reported that Nissan was interested in investing over $400 million into Fisker’s truck platform, which would it allow it to manufacture Fisker’s Alaska truck in 2026. The term sheet had already been prepared, while a deal could have been announced as early as this month.
With that potential deal scrapped, it appears that Fisker is now on its own. That isn’t good news.
Last month, the company warned that it would likely have “substantial doubt” about its ability to continue as a going concern once it submitted its 2023 Form 10-K. Fisker also announced a 15% headcount reduction as part of its transition to a dealer-partner model and in order to cut costs.
Meanwhile, more dilution for shareholders is likely on the way. On April 24, the company will hold a special meeting of stockholders with three proposals up for vote.
The first proposal seeks approval for the potential issuance of more than 19.99% of outstanding FSR stock once the notes related to the $150 million financing commitment are converted to common stock. The second proposal involves increasing authorized common stock to 4 billion from 2 billion.
Finally, the last proposal seeks approval for a reverse stock split in a ratio between 1-for-10 and 1-for-50 at any time before Dec. 31, 2024.
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On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
