Written by Cláudio Afonso | LinkedIn | X
Tony Aquila became the chief executive officer (CEO) of the EV maker Canoo in April 2021. Three and a half years later, the startup is facing its toughest moment ever as it urgently needs new funding to survive the next few months.
In a new SEC filing, Canoo said it is “in advanced discussions with various capital sources.” As of the end of September, the company had cash, cash equivalents and restricted cash of $16 million.
Aquila, who founded AFV Partners LLC in 2019, initially provided rescue capital to Canoo in July 2020. The company describes itself as a sustainable capital vehicle investing globally in assets with a positive environmental impact.
Canoo, now headquartered in Texas, became part of AFV’s investments in July 2020 when the firm agreed to provide rescue funding to the company.
Speaking to EV, an internal source revealed that employees of Aquila’s AFV Management Advisors are paid through Canoo’s payroll system while adding that these have not been affected by the recent three waves of furloughs.
As an example, the source mentioned Brent Hale, AFV’s property manager, claiming he is listed on Canoo’s manufacturing payroll alongside his team, which remains active.
On LinkedIn, Hale lists himself as both a Senior Project Manager at Canoo and a Property Manager at AFV. His profile describes him as a manager with over 25 years of experience in manufacturing maintenance, engineering, safety, and operations, including more than 15 years in management roles.
Canoo announced on November 6 that it had secured a $12 million revolving credit facility from AFV Management Advisors, a company founded by Canoo CEO Tony Aquila. Two weeks earlier, in late October, the EV maker said it had raised $1.12 million through a promissory note issued by AFV.
The source confirmed the shut down of Canoo’s factories detailing that the EV battery manufacturing facility in Pryor, Oklahoma, was closed on Tuesday, followed by the closure of its Oklahoma City plant on Wednesday.
Canoo said on Wednesday that it has furloughed another 82 employees, just one week after confirming the second temporary staff reduction.
In a statement, the company led by Tony Aquila said the latest furlough affects “both salaried and hourly” workers adding that it is “idling its factories in Oklahoma while it works to finalize securing the capital necessary to move forward with its operations.”
Last Friday, Canoo confirmed in a SEC filing that it had furloughed “an additional 10 employees” bringing the total number to “50 non-essential employees over the last 90 days.” With the new round, the number climbs to 132 workers.
The company’s stock closed 7.3% higher on Wednesday at $0.126. As recently approved by shareholders, Canoo will be eyeing a reverse stock split to regain compliance with the Nasdaq.
However, the priority is now to secure enough funding to sustain its daily operations for the next weeks and months. The Texas-headquartered start-up said on Wednesday’s filing it is “in advanced discussions with various capital sources.”
“We regret having to furlough our employees, especially during the holidays, but we have no choice at this point. We are hopeful that we will be able to bring them back to work soon,” Canoo said in a statement.
While Canoo did not disclose which teams were affected in last week’s furlough (or their duration), affected employees told EV that the furlough period is twelve weeks, or roughly three months — the same as in the previous round announced in early November.
Earlier this week, Canoo and its SPAC sponsors secured a fresh legal victory as the Delaware Supreme Court upheld the dismissal of investor claims alleging the company misled shareholders during its blank-check merger.
The ruling affirms an earlier Delaware Chancery Court decision rejecting claims by a Hennessy Capital LLC investor, who argued shareholders were deceived in the December 2020 SPAC deal that took Canoo public. The high court unanimously ruled that the chancery’s dismissal should stand, Justice Karen L. Valihura said in the court filing.
Last week, the former Tesla and Rivian executive James C. Chen resigned and will leave the Board of Directors by the year end, less than a year after joining. Chen’s departure follows the announcement of the second round of furloughs last week, which the company confirmed in the same SEC filing.
Written by Cláudio Afonso | LinkedIn | X
