Even before ink was dry on the news that FreedomRoad Financial was offering retail financing for EV snowmobile and PWC pioneer Taiga Motors, came word they are filing for protection from creditors in Canada. According to the headlines in the financial press, the Quebec-based EV OEM is selling its assets under court-appointed process and Taiga had actually halted vehicle production back in April. In June, Chief Financial Officer Eric Bussières announced he was departing “to pursue another opportunity outside the powersports industry” effective July 12. On July 10, Taiga announced it had applied for protection pursuant to the Companies’ Creditors Arrangement Act (CCAA).
Taiga claims the mild winter hurt its sales of snowmobiles and, essentially, it ran out of money. It has been granted creditor protection in a Quebec Superior Court… this comes even after the Export Development Canada (EDC) granted it $4.4 million in financing, from which it has drawn $1 million, which should alleviate its immediate needs for cash. Now, the company said it is seeking new investors or even a sale. Deloitte Restructuring Inc. will monitor its restructuring efforts under the CCAA.
“Taiga looked to be in good shape this fall. At the end of the third quarter, the company said it had delivered a record 147 vehicles and had more than 2,750 pre-orders on its books,” reports Gabriel Friedman in the Financial Post. “In addition to $5.8 million in cash, EDC had given it a $15-million secured loan to scale production up.” In the filing. Taiga admitted its debtors had outstanding liabilities on a consolidated basis of approximately $93.2 million.
“It’s been a long drop for a company that started trading on the Toronto Stock Exchange in April 2021 and initial reports implied it was worth hundreds of millions of dollars. That summer, its stock soared above $9 per share,” notes Friedman. “More recently, its share price has hovered around 30 cents, which puts its market capitalization at less than $9.7 million.”
“It follows a familiar story: some young founders win a small amount of money to realize a prototype of an electric vehicle, find massive initial public and financial interest, but then discover that despite being "disruptive" and raising over $100m through a SPAC, manufacturing and delivering motor vehicles is a brutally hard business,” concludes Motorcycle Global’s Michael Uhlarik. Stay tuned…
