Cash-strapped electric bus and battery maker Proterra Inc. filed for Chapter 11 bankruptcy protection Monday. The company plans to keep running while sorting out its business units during reorganization.
Proterra voluntarily filed its petition in the District of Delaware where it is incorporated. It hopes to strengthen its financial position through recapitalization or sale of some business units. In addition to its original line of electric buses, Proterra makes battery packs and develops electric infrastructure.
The Burlingame, California-based company filed a notice of going concern in March as part of its 2022 10-K filing with the Securities and Exchange Commission. Such a filing calls into question whether a company would be in business a year from the filing.
“We have faced various market and macroeconomic headwinds that have impacted our ability to efficiently scale all of our opportunities simultaneously,” CEO Gareth Joyce said in a news release after markets closed Monday.
Employee salaries and benefits will continue during reorganization
Proterra plans to use existing capital — it had $296 million in cash and equivalents at the end of the first quarter — to fund operations. That includes paying employee salaries and benefits, and paying vendors for future purchases while freezing back payments as allowed by Chapter 11 rules.
With the filing in U.S. Bankruptcy Court in Delaware, Proterra canceled its second-quarter earnings call planned for Wednesday. Proterra (NASDAQ: PTRA) shares closed down 10% at $1.43 but fell more than 62% to 54 cents in after-hours trading.
During a Q1 earning call, Proterra projected revenue of $450 million to $500 million in the second half of 2023 based on a minimum backlog of $1 billion in orders.
Consistent disappointment to Wall Street
Proterra has consistently disappointed Wall Street with lower-than-expected revenues, especially for a 19-year-old company that steadily built an electric bus business before getting into battery making for electric vehicles and electric infrastructure.
The company decided to fast-track its public debut via special purpose acquisition company, more for the attention it could get for its newer business units than just for the $640 million it received when its SPAC with ArcLight Clean Transportation Corp. closed in June 2021.
Proterra cut 300 jobs in January and combined its bus and battery making into a single operation in Greer, South Carolina. Facing default on loans in March, debtors extended the loans until 2028 with Proterra agreeing to pay higher interest — 12% a year in cash and stock.
Most other covenants, including one requiring Proterra to have $125 million in cash on hand at the end of each quarter, were waived. The lenders also agreed to look the other way on Proterra’s auditor’s statement of a notice of going concern.
Cash burn is biggest issue
But cash burn is the biggest issue. Proterra’s Powered 1 plant is running battery modules on one line, with a second line planned in 2024. Even with the breathing room on its debt, Proterra expected to burn through about half its cash as it ramps up the new plant.
“The foundation we have built has set the stage for decarbonization across the commercial vehicle industry [and] the great potential in all of our product offerings to enable this important transformation,” Joyce said. “This is why we are taking action to separate each product line through the Chapter 11 reorganization process to maximize their independent potential.”
Related articles:
Former Daimler Truck CEO becomes chairman of Proterra
Startups struggling to make financial ends meet
GSCW chat: Proterra buying and selling into a broken supply chain
Click for more FreightWaves articles by Alan Adler.
The post EV battery maker Proterra files for Chapter 11 bankruptcy protection appeared first on FreightWaves.
