Fisker warns of possible 'event of default' following NYSE move to delist stock

By Bill Peters

Exchange cites 'abnormally low' price levels, says trading in EV-maker's stock will be suspended immediately

The New York Stock Exchange on Monday said it would begin the delisting process for Fisker Inc. stock - a move the struggling electric-vehicle maker said would trigger an "event of default" on some of its convertible debt.

Fisker (FSR) said it expected its stock to be quoted over the counter, on the OTC Pink platform or another market operated by OTC Markets Group.

The announcements were the latest bad news for Fisker, which has been searching for a way to stay afloat following an array of issues - including competition, product quality and a drop-off in demand for electric vehicles - as its finances grow thinner. The Wall Street Journal this month reported that Fisker had been preparing for a potential bankruptcy filing.

The NYSE, in a statement, cited Fisker's "abnormally low" share price, and said trading in the stock would be suspended immediately. Shares had been trading at around 9 cents, and are down 95% year to date.

The exchange said the automaker has a right to a review of the decision.

Fisker, in a filing shortly afterward, said a delisting would trigger a requirement to offer to buy back its unsecured 2.5% convertible notes due in 2026, and would cause "an event of default under our senior secured convertible notes due 2025, which would permit the holders of the 2025 notes to accelerate such notes and make them immediately payable in full."

The company, in that filing, said it didn't have the financial cushion for those circumstances.

"We do not currently have sufficient cash reserves or financing sources sufficient to satisfy all amounts due under the 2026 notes or the 2025 notes, and as a result, such events could have a material adverse effect on our business, results of operations and financial condition," the filing said.

Earlier on Monday, before the halt in trading, Fisker said in a filing that a potential deal with a major automaker - Reuters reported it was Nissan (JP:7201) - that could have represented a financial lifeline had been terminated.

As a result, the company said, it would be unable to meet closing conditions to secure financing from an investor. Fisker said it planned to discuss with the investor the possibility or waiving that closing condition, or having that investor change the terms of the financing.

In the filing, Fisker said it "continues to evaluate strategic alternatives." Those alternatives included restructurings, refinancing debt, and selling off some parts of its business.

When Fisker reported preliminary quarterly results last month, The company said it would cut around 15% of its workforce, after raising greater doubts about its ability to stay in business.

It said that in 2023, it suffered from higher interest rates, along with supplier delays that set back deliveries for its Ocean SUV. Sales took a hit as it pivoted away from selling cars to customers directly and began working more with dealers.

"Although we have good reason to be optimistic about this process and have seen tremendous enthusiasm from dealers about the expansion of the EV market, we are aware that the industry has entered a turbulent, and unpredictable period," Chief Executive Henrik Fisker said in the company's earnings release.

-Bill Peters

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03-25-24 1841ET

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