2023-07-18 16:34:05
This financing will also reduce the anxiety that existed around the ability of the firm to continue its operations, according to Benoît Poirier of Desjardins Securities. (Picture: courtesy)
What to do with the titles of Lion Electric, Coveo Solutions and Wells Fargo? Here are some recommendations from analysts likely to move prices soon. Note: the author may have a totally different opinion from that expressed by the analysts.
Lion Electric (LEV, $3.00): She gets her hands on US$142 million in funding
Yesterday morning, the St-Jérome electric bus manufacturer announced a three-part financing agreement totaling 142 million US dollars (M$US). First, by way of a private placement with Investissement Québec, the Solidarity Fund for Québec Workers (FTQ) and Fondaction, it will issue US$74 million in senior unsecured convertible debentures. They will bear interest at 13%, with a maturity of five years and will be convertible into ordinary shares of the company at a price of US$2.58.
It will also issue, by way of a private placement with two investors, namely the MACH Group and the Mirella and Lino Saputo Foundation, non-convertible debentures maturing in five years and bearing interest at 11% for an amount of $90 million. A third private placement will allow these holders of convertible debentures to receive warrants allowing them to purchase 22.5 million common shares at a price of $2.81.
Assuming that all convertible debentures will be converted into shares and that all warrants will be exercised, a total of 89.4 million new shares will be issued, or approximately 40% of the number of shares currently outstanding, estimates Benoit Poirier , analyst at Desjardins Securities.
He doesn’t think the effect of this dilution will have too great an impact on the share price. First, the company signaled last quarter that it was planning to raise capital in the coming months, so investors probably weren’t too surprised by the announcement.
This financing will also help reduce the anxiety that existed around the firm’s ability to continue its operations. Finally, the participation of three major Quebec entities in this financing should have the effect of reassuring investors as to the support on which Lion can count.
The Desjardins analyst recommends buying the stock while recognizing its speculative nature. Its target price is US$4.00.
Coveo Solutions (COV, $8.89): Proven on the execution front
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