Fisker (OTCMKTS:FSRN) stock is in the green after the pure-play electric vehicle (EV) company announced that it had sold $3.45 million worth of senior secured notes due on June 24 to a holder of its 0% senior convertible notes due in 2025. The June 24 notes carry an interest rate of equal to the “three-month Secured Overnight Financing Rate plus 15% per annum.” The buyer also has the option to purchase an additional $4.04 million of the same notes.
The offering closed on May 10 while Fisker received gross proceeds of $3.45 million. Fisker will use the proceeds toward an approved budget set by the buyer. In addition, Fisker must provide the buyer with a weekly approved budget variance report.
Fisker also revealed an interesting piece of information in relation to the notes:
“The Notes prohibit us from entering specified fundamental transactions (including, without limitation, mergers, business combinations and similar transactions).”
If a change of control occurs at Fisker, the note holder will be eligible to redeem all or a portion of the notes in cash at the redemption amount. The buyer is also eligible for a full cash redemption in the event of a default or bankruptcy.
Fisker Stock: Fisker Completes $3.45 Million Notes Sale
In late April, CEO Henrik Fisker informed employees at an all-hands meeting that four automakers were interested in buying out Fisker. This came after Fisker’s plans to receive a $400 million investment from Nissan (OTCMKTS:NSANY) fell apart. Now, with the new note rules, it appears that these four automakers may have backed out or are waiting until the notes expire. At the same time, it’s worth pondering why Fisker would issue notes if it had plans to be bought out.
While the note sale will provide Fisker with much-needed capital, it still isn’t enough to save the company from its poor rollout of the Ocean SUV. Following price cuts of up to 39% and numerous complaints alleging software issues, many consumers have lost trust in the company. However, the price cuts did result in Fisker selling out of the sport trim of the Ocean in the continental United States.
Making matters worse, Fisker announced yesterday that its auditor, PwC, had declined to stand for re-appointment. The company has not yet disclosed who its new auditor will be.
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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.
