New Flyer, a Winnipeg-based bus manufacturer looking to lead the EV transition, announced a corporate refinancing plan on Wednesday as it struggles to meet product orders and grapples with a plunging stock valuation. 

The company—which operates under parent manufacturing company NFI Group—is a major public transit provider in North America, with fleets of its buses operating in the transit services of Toronto, Vancouver, New York, Miami and other cities. Its future could have wider implications for the adoption of electric and fuel cell technology, as NFI was an early mover on the technology. A February Financial Post article described its ambitions to be the “Tesla of mass transit.” 

The background: 

NFI stock was trading near $60 per share at its pre-pandemic high, but supply chain woes during COVID-19 threw the company into a tailspin. Today NFI is trading below $10 and its CEO of 14 years, Paul Soubry, is scrambling to assure investors it can get back into the right lane. With debts coming due next month, he’s running out of time. 

What’s the big (refinancing) deal?  

The proposal mostly involves extending NFI’s debt obligations to provide breathing room while raising some new capital. The company wants to: 

• Extend the maturity on an existing $1 billion revolving debt facility from August 2024 to April 2026, while also converting that facility into $761 million of first-lien loans and revolving credit
• Extend the maturity on a separate £40 million credit facility from June 2023 to April 2026, while converting the facility into £31 million in loans and revolving debt
• Extend the terms on $100 million in debt issued by Export Development Canada and the Manitoba government, which came as part of a financial support package less than five months ago.
• Raise another $150 million in equity and up to $250 million in second-lien debt 

What’s next? 

NFI hopes to lock down the updated financing plans by June 25, 2023, at which time the company’s secured covenants expire and its £40 million credit facility matures. If it can’t do so, NFI will “need to obtain further extensions, which cannot be assured,” it said in a press release. 

Meanwhile, the company’s backlogs persist. In a corporate presentation earlier this month after its latest earnings report, NFI said its so-called “work-in-progress” inventory, which includes buses that are still missing critical components, sits around $450 million, or near the highest level since early 2019. NFI’s zero-emissions buses, which account for around 25 per cent of deliveries, currently make up about 36 per cent of the backlog.

The markets were skeptical about the refinancing plan—NFI stock closed down nearly 11 per cent Wednesday.