According to media reports, electric vehicle manufacturer Fisker recently submitted an 8-K filing revealing that the company failed to repay loans totaling nearly $3.5 million last month. This may be a prelude to further decline as Fisker faces the risk of bankruptcy.
The 8-K document submitted by Fisker to the U.S. Securities and Exchange Commission (SEC) on May 29, 2024, shows that the company received a notice from noteholder CVI Investments stating that it failed to repay the amount due on May 10, 2024, leading to a total default of $3.456 million. CVI is demanding that Fisker fulfill its repayment obligations.
In the filing, Fisker stated: "On May 29, 2024, the noteholder notified us that it is exercising its rights under Section 4(b) of the 2024 Note, requiring the company to immediately redeem 100% of the outstanding 2024 Notes at the Event of Default redemption price, including all applicable interest, late fees, redemption premiums, and other amounts payable under the 2024 Notes, thereby accelerating the redemption of the 2024 Notes."
Thus, faced with millions of dollars in loan arrears and the threat of late fees and corresponding interest, Fisker may need to scramble to repay the loans. However, repaying the loans, regardless of the amount, could lead to its bankruptcy.
Previously, Fisker released its flagship product, the Ocean electric vehicle. However, shortly after, the company was mired in trouble due to multiple vehicle software issues and lower-than-expected sales. To rebound, Fisker repeatedly lowered its production targets in 2023 and even started pulling new demand levers to try to maintain asset liquidity.
In March 2024, Fisker detailed the "substantial doubt" about its ability to continue as a going concern in its 2023 annual report. As the word "bankruptcy" began circulating, the American automaker revealed a new plan hoping to secure funding support from an original equipment manufacturer (OEM) partner. Despite multiple negotiations, the efforts ultimately failed. Fisker has been striving to avoid bankruptcy.
Shortly after, Fisker ceased production of the Ocean in collaboration with Magna Steyr and lowered the model's price to clear existing inventory. Despite the very attractive pricing, consumers were still reluctant to buy electric vehicles from a company teetering on the brink of bankruptcy, leading tens of thousands of preorder customers to cancel their orders.
In early May, it was reported that Fisker's Austrian subsidiary had applied for restructuring and sought overseas creditor protection in court, a filing similar to U.S. bankruptcy protection.
