Executives with struggling electric vehicle manufacturer Arrival have secured an equity financing line they say will be “a backstop” as they look to raise $500 million to start production of a Class 4 delivery van for the U.S. market.
Arrival’s share purchase agreement with New York-based investment firm Westwood Capital Group LLC provides for the latter to periodically buy shares up to a total of $300 million, which is more than double Arrival’s current market value. But speaking to analysts and investors March 13, CFO John Wozniak said the Arrival team is taking “a very conservative view” of how much it will lean on Westwood. The company last month also secured $50 million in funding from hedge fund Antara Capital, its largest bondholder, and will not rely heavily on the Westwood facility.
“That's the type of product where the amount of capital that you can raise in any given month is going to be determined by the market volumes and the share price,” Wozniak said. “What our hope is that it will become more meaningful over time, particularly as we execute on some of the milestones that we've laid out.”
For now, those milestones center on Arrival’s L Van, which is being built at the company’s England factory and is smaller than the one leaders hope to build in Charlotte starting late next year. That XL Van will focus on the U.S. last-mile market segment best known for UPS and FedEx delivery vehicles but will be similar to the L model in its design and construction process. The Arrival team plans to build and test 10 L vans this year as a platform to further develop the XL model, which is expected to sell for more than $100,000.
That development, however, is contingent on more successful capital raising for Arrival, which has heavily pruned its ambitions in the past year, halting work on its buses and slashing production and sales targets while turning over a portion of its C-suite. Of the $500 million total needed to launch production in Charlotte by the end of next year, Wozniak said about $200 million will be needed for prototyping, finishing the company’s plant and investing in hard tooling. He added that Arrival needs to raise between $100 million and $150 million this year to keep the XL program on track.
Shares of Arrival (Ticker: ARVL) fell about 10% March 13 to about 18 cents after the funding news and were essentially flat the next morning. They have lost more than 80% of their value over the past six months, slashing the company’s market capitalization to less than $140 million.
