Arrival said on Tuesday it will convert shareholder hedge fund Antara Capital Master Fund LP’s USD 20 million loan into equity, a move that would help the British electric-vehicle startup lower its debt load.
According to the deal, Antara will not be allowed to sell more than 10% of the traded volume of Arrival’s ordinary shares, it receives in the exchange, on any given trading day. Antara has a 1.69% stake in Arrival, according to Refinitiv data.
After the exchange, Arrival will still have about USD 300 million of principal amount in convertible notes that can be converted into equity.
Cash-strapped Arrival, which saw its cash and cash equivalents slump at the end of the first quarter, has been exploring options, including laying off 50% of its employees, to tackle a fund crunch it has been facing.
EV firms have been experiencing a cash problem over the past few months, as high costs related to production ramp-ups and soaring inflation eat into their reserves.
Arrival in April effected a 1-50 reverse stock split to regain compliance with Nasdaq’s listing rules and said it will merge with blank-check firm Kensington Capital Acquisition Corp V to raise cash.
