Lion Electric, a manufacturer of all-electric medium and heavy-duty urban vehicles, has entered into amendments to certain of its senior credit instruments, namely its senior revolving credit agreement entered into with a syndicate of lenders represented by National Bank of Canada as administrative agent and collateral agent, including Bank of Montreal and Federation des Caisses Desjardins du Québec; its loan agreement entered into with Finalta Capital and Caisse de dépôt et placement du Quebec; and its non-convertible debentures issued in July 2023 to a group of investors led by Mach Group and the Mirella & Lino Saputo Foundation. The company also entered into a new agreement with Investissement Québec providing for a loan under the ESSOR program in the amount of CAD$5 million, which loan may, under certain conditions, be drawn up to CAD$7.5 million.
The revolving credit agreement amendments provide for, among other things, the suspension of the financial covenants currently applicable under the revolving credit agreement until Sept. 30, 2024, namely the tangible net worth test and the springing fixed charge coverage ratio. In furtherance of such amendments, the company will be required during the covenant relief period to maintain a minimum amount of available liquidity (calculated based on the maximum amount that can be drawn under the revolving credit facility and cash on hand) of CAD$15 million subject to limited exceptions.
Under the revolving credit agreement amendments, the company will also be subject to enhanced reporting obligations and limitations on the use of any advances made under the revolving credit facility until such time that the amount available to be drawn under the revolving facility equals or exceeds 50% of the total borrowing capacity under the revolving facility for 30 consecutive days. The requirements relating to an availability block and the funding of an interest reserve account of CAD$10 million upon availability dropping below 30%, which were introduced in July 2023, are no longer applicable under the revolving credit agreement amendments.
Further, the revolving credit agreement amendments provide for certain increases in the applicable pricing grid and the effective deferral of the interest payable under the revolving credit facility during the covenant relief period. All other material terms and conditions of the revolving credit agreement, including the Aug. 11, 2025 maturity date and the general affirmative covenants, restrictions, negative covenants and events of defaults thereunder, remain substantially unchanged.
The company has also entered into the ESSOR loan in the amount of CAD$5 million, which loan may, under certain conditions, be drawn up to CAD$7.5 million. The ESSOR loan has an initial term of three years, bears interest at a fixed annual rate of 13% per annum and provides, subject to the terms and conditions therein, for a moratorium of 12 months on the payment of any principal and interest thereunder.
The company also amended the loan agreement entered into with Finalta Capital Fund as lender and administrative agent and Caisse de dépôt et placement du Quebec (through one of its subsidiaries) as lender to provide for a minimum available liquidity requirement aligned during the covenant relief period with the one added to the revolving credit agreement pursuant to the credit agreement amendments. Further, the loan agreement amendments provide for an increase in the applicable interest rate to 13% and capitalization of 50% of the interest payable during the covenant relief period. All other material terms and conditions of the amended loan agreement, including the Nov. 6, 2024 maturity date, remain substantially unchanged.
Finally, the company amended the non-convertible debentures issued in July 2023 to a group of investors led by Mach Group and the Mirella & Lino Saputo Foundation to provide for the capitalization of 50% of the interest payable under the non-convertible debentures during the covenant relief period.
