In a regulatory filing released on Monday, Fisker Inc. (NYSE: FSR) revealed its intention to sell $340 million in convertible debt. The company projects net proceeds of approximately $296.7 million, factoring in a 12% issue discount and additional fees. The convertible notes will mature in 2025.
Fisker intends to allocate the funds toward supporting its overall corporate operations. In addition, the company aims to enhance its growth prospects by adding an extra battery pack line in 2024 and beyond. The company also plans to allocate funds for capital expenditures and the development of future products.
The news has propelled Fisker (FSR) stock to surge by 17.17% to $7.03 on Monday.
Fisker’s Position in the EV Market
Fisker’s convertible notes offering arises at a time when the company is striving to ramp up production of its first electric vehicle (EV) amidst a tightening capital environment for emerging startups. Notably, Fisker belongs to the league of EV companies that opted for a public listing through a merger with a special purpose acquisition company (SPAC).
Many of these once-high-flying EV SPACs witnessed a surge in share prices throughout 2021 and 2022 but have since encountered financial difficulties. Numerous companies have resorted to filing for bankruptcy, while others are actively exploring measures to reduce costs and raise additional capital.
Fortunately, Fisker has managed to steer clear of the predicaments faced by its EV SPAC counterparts. However, it has not been entirely immune to challenges, including cash burn associated with the design, production, and sale of vehicles, regardless of whether they are electric or not.
Production Challenges and Recent Deliveries
Fisker successfully delivered its maiden all-electric Ocean SUV in Denmark this May, followed by deliveries to customers in the United States in June. However, the company has encountered production bottlenecks, adversely affecting its financial performance.
During the second quarter, Fisker reported the production of 1,022 Ocean SUVs, falling short of its own projections by several hundred vehicles. The company attributed the shortfall to a shortage of components from its sub-suppliers. Fisker is actively collaborating with all suppliers to accelerate the ramp-up process and meet the required production volumes.
