A Quebec judge will approve a transaction aimed at saving Lion Electric Co. from bankruptcy, but shareholders and most creditors will not receive any proceeds.
An investor group that includes Montreal real estate tycoon Vincent Chiara will take over the Saint-Jerome, Quebec-based company using a complex legal process called a reverse vesting order. The order keeps keep Lion’s certifications intact while eliminating liabilities and unwanted assets.
“This is the only potential transaction that makes sense. There are no others,” Quebec Superior Court Judge Michel Pinsonnault said Thursday.
“Even if the offer is meager, it has at least the merit of keeping the company in business,” Alain Riendeau, a lawyer representing a banking syndicate of lenders, said during a court hearing last week. No financial details were disclosed.
Five offers were made to save Lion, including some for an asset liquidation, according to Jean-Francois Nadon with Deloitte LLP, the court-appointed monitor for the matter. Chiara’s group made the best offer even after unsuccessfully requesting $17 million from the Quebec government.
Under the group’s plan, Lion will focus on building electric school buses at its Saint-Jerome plant, making it the sole manufacturer of such vehicles in the country. Buyers will benefit from a Quebec government incentive for the buses.
Even in its downsized form, Lion will “face some tough challenges and difficult market conditions,” Guy Martel, a lawyer representing Lion, told the court Wednesday. “Just look at what’s happening in the US right now.”
Lion thrived during the electric vehicle boom, reaching a market capitalization of $4.2 billion in 2021 and growing to 1,400 employees the next year, and even started producing electric commercial trucks. It filed for creditor protection in December after it failed to repay some debts and couldn’t find a buyer for the business or its assets.
The firm has already shut down its bus manufacturing plant in Joliet, Illinois, as well as a battery pack assembly plant in Mirabel, Quebec.
Power Corp. of Canada, the holding company controlled by the billionaire Desmarais family, was the largest shareholder in Lion with a 34% stake, according to data compiled by Bloomberg.
In total, Lion owed more than $244 million to secured and non-secured creditors, according to a list provided by the monitor at the end of last year. National Bank of Canada, the largest, had lent $47 million. Caisse de Depot et Placement du Quebec and Finalta Capital Inc. were also among the creditors, but an agreement will allow them to continue receiving payments.
— By Mathieu Dion (Bloomberg)
