Adding to the woes of the electric vehicle startup Fisker, the New York Stock Exchange said Monday that it will immediately suspend trading and commence proceedings to delist the company’s stock due to “abnormally low” trading price levels. The news also comes at the heel of a “large automaker”, reportedly Nissan, terminating negotiations with the cash-strapped company for a potential investment.
According to a regulatory filing, the stock delisting will trigger repayment clauses in two outstanding notes, the 2.50% convertible notes due 2026 and the senior secured convertible notes due 2025. Fisker currently cannot afford the repayment as it does not have sufficient cash reserves or financing sources to honor the amounts. “As a result, such events could have a material adverse effect on our business, results of operations and financial condition,” the company said.
A TechCrunch report highlighted that this decision comes a month after the NYSE warned the startup about its stock price consistently falling below $1, violating the exchange’s listing requirements. While Fisker can review this decision, the company instead plans to move to the OTC Pink platform.
The OTC Pink platform, also known as the Pink Sheets, is a marketplace for trading over-the-counter (OTC) stocks. The Pink Sheets are characterized by a variety of companies, including small or developing companies, international companies that don’t wish to comply with the rigorous listing requirements of a major U.S. stock exchange, and companies that are in financial distress or bankruptcy.
Last week, Fisker said it could need to seek protection under the applicable bankruptcy laws as it faces financial crunch. The company also announced a six-week pause in production of its Ocean SUV alongside a scramble to secure funding. With a mere $121 million in accessible cash and a ballooning accounts payable of $182 million, Fisker is casting doubt about its ongoing operations.
Despite the challenges, Fisker is actively seeking a lifeline and was negotiating with a major automaker, rumored to be Nissan, for a potential investment and partnership. With now that also out of the picture, Fisker’s path to recovery appears steep. The company said in another SEC filing that it is evaluating “strategic alternatives” including in or out-of-court restructurings, capital markets transactions, repurchases, redemptions, exchanges or other refinancings of its existing debt, the potential issuance of equity securities, and the potential sale of assets and businesses, among other measures. However, the availability of any of these alternatives cannot be assured.
