California-based EV maker Fisker plans to sell $340 million in convertible debt, according to a regulatory filing posted Monday. The company expects the net proceeds to be $296.7 million, the lower amount taking into account a 12% issue discount and other fees. The notes are due in 2025.
Fisker plans to use the funds to support its general corporate operations as well as adding an additional battery pack line to “support growth” in 2024 and beyond. The company said funds will also be used for capital expenditures and the development of future products.
Shares initially fell in pre-market trading but have since rebounded. Shares are up 12.3% to $6.74 in late afternoon trading.
The convertible debt sale comes as Fisker tries to ramp production of its first EV amid a tightening capital environment for upstarts. Fisker is one of several EV companies that went public via a merger with special purpose acquisition company.
The vast majority of those once-high flying EV SPACs, which saw share prices spike in 2021 and 2022, have since fallen on cash-strapped times. Several have filed for bankruptcy, while others scramble for ways to cut costs and raise capital.
Fisker has largely avoided the problems of its EV SPAC brethren. However, it still has face headwinds along with the cash burn that comes from designing, producing and selling vehicles — EVs or not.
Fisker delivered its first all-electric Ocean SUV in Denmark this May and to U.S. customers in June. But it’s encountered production bottlenecks that has cut into its bottom line.
Fisker reported earlier this month that it produced 1,022 Ocean SUVs in the second quarter, falling short of its own expectations by several hundred vehicles. The company blamed the shortfall on a shortage of components from its sub-suppliers. Fisker said it’s working with all suppliers to ramp to the required volumes.