The British electric van champion was once valued at $13bn and has had to defend itself against legal action from a creditor. It is struggling with a falling share price.
A supplier filed a winding-up petition against Arrival for an unpaid debt.
The legal demand was withdrawn and sheds new light on the difficulties faced by Arrival in advance of its $50m (PS41m), fundraising last week. In an effort to cut its cash burn to $10m per month, the company will be laying off 800 employees .
LFE Engineering, a steel fabrication company based in Coventry, filed the petition. In February, a creditor demanded that a court close down a company because it had not paid its debts.
Andy Smith, LFE’s director, stated that Arrival had been sued because it couldn’t get money from them. He also said this was the first petition his company had used in over ten years. According to Smith, invoices for around PS12,500 have been paid.
Arrival is currently in restructuring and has abandoned plans to build a van factory in Oxford for the purpose of opening a facility in the USA.
It comes after a dramatic turn of fortune for the company. Boris Johnson, then prime minister, hailed it as one of a “green dozen” of eco-friendly start ups in 2021.
Arrival was floated in New York in 2012 with a $13bn valuation. It also plans to establish a network of van-building microfactories in hundreds of cities around the world. The company claimed that it could produce electric vehicles at 50 percent less cost than its competitors and had developed a manufacturing model that was “as scaling as McDonald’s or Starbucks”.
Arrival’s market value has plummeted to $170m, amid doubts about its viability and wider losses in tech stocks.
The stock is now trading at 27 cents, down more than $1 from its highs of over $31. It has also been threatened by delisting by Nasdaq after it fell below $1 per share.
Arrival was founded in 2015 by Denis Sverdlov (Russian entrepreneur). It has invested heavily in developing new materials for light-weight electric cars and securing patents.
After months of delays, the company’s first production-ready van was finally rolled off its robotic assembly lines in the UK in September.
Arrival made the announcement that its main production plan would shift to Charlotte in North Carolina. This will allow it to claim additional incentives under President Joe Biden’s green agenda. The company has an agreement to produce electric vans and is currently working with Uber to create a green ride-hailing vehicle.
Arrival’s Bicester plant will no longer produce vans for support testing and trials. Two months have passed since the UK entity’s accounts were opened.
Companies in the electric vehicle sector have seen their shares plummet as interest rates rise, and the flow of venture capital money dry up amid increasing economic uncertainty.
As buyers put off buying electric cars due to high upfront costs and rising energy costs, they are also less inclined to buy them.
Britishvolt, a potential electric car battery manufacturer, filed for administration last month. Recharge Industries in Australia has since purchased it.
Arrival sent a going concern notice to the US markets in November. It stated that it didn’t have enough cash to last 12 months. According to Arrival, it had cash equivalents of $330m and had lost $310m over the three months up to September. It had only $205m cash left at the end of December.
Since then, it has implemented a cost-cutting initiative, with the goal of reducing its quarterly burn rate to around $30 million. Teneo was also appointed to provide advice on future options.
Arrival announced last week that it had restructured some its borrowing through a debt-for-equity swap with one its largest lenders. Antara Capital invested $50m and it swapped $122m of debt for stock. Its annual interest payments were cut by $4.2 million.
John Wozniak is Arrival’s chief finance officer. He stated that the decision “significantly strengthens [our] balance sheet by reducing our debt by 38pc.”
Next Thursday, the electric van manufacturer will publish its annual results. A spokesperson for Arrival declined to comment.