How many squeezes are left?
EV SPAC land is looking as bleak as ever with a pair of filings in the past week showing that money is increasingly hard to come by. Without more capital, we may see a new pileup of crashed electric vehicle companies, so this news is concerning.
First up is Arrival. The company’s latest financial life line — a term loan facility — has been quickly quashed, leaving it with few options to continue operations.
We last heard from the U.K.-based commercial EV company back in July 2023 after it ended a deal to merge with a special purpose acquisition company (SPAC). Yes, that’s right, the company that went public via a merger with a SPAC was going to merge with a second blank-check company called Kensington Capital Acquisition Corp. in a bid to avoid bankruptcy. The SPAC with Kensington had a pro forma enterprise value of $524 million.
That deal was called off in July, mere weeks after it was first announced.
A dash for cash
Why was Arrival so strapped for cash to pursue a second SPAC deal? And why did it come back into the news this week for financing-related disclosures? It lost too much money, for too long, and was too far from having material revenues.
In numerical terms, Arrival told investors that it closed 2022 with $205 million worth of cash on hand. Not bad, but the company had burned through $126 million (negative operating cash flow) in the fourth quarter of last year. The company torched less cash in Q1 2023 — a comparatively modest $75 million — but that took it down to just $130 million in cash on hand at the end of the first quarter.