Automotive News Canada - September 2023 - 13

* SEPTEMBER 2023
13
Canada Drives cleared to restructure
Unsecured creditors to get
pennies on the dollar, if anything,
but the company keeps its
lead-generating business
By DAVID KENNEDY
T ORONTO BUREAU CHIEF
The new entity, Tevva Inc., is expected to be headquartered
in Delaware and will focus on Tevva's lineup of medium- and
heavy-duty electric commercial trucks. SUPPLIED PHOTO
ElectraMeccanica merges
with U.K. truck company
The tie-up caps the
Canadian EV maker's
failed bid to sell the
three-wheeled Solo
in the United States
By DAVID KENNEDY
T ORONTO BUREAU CHIEF
TROUBLED ELECTRIC CAR
maker ElectraMeccanica
Vehicles Corp. and Tevva Motors
Ltd. of the U.K. have agreed to
a merger that will give the commercial-truck
startup a North
American foothold, while providing
ElectraMeccanica a new
direction after the company abandoned
its threewheeled
Solo EV
in April.
The all-stock
deal announced
Aug. 15 will
grant Tevva
shareholders
a 76.5 per cent
stake in the
combined company,
while
shareholders
in ElectraMeccanica,
based
in
Vancouver, will
hold the remaining
23.5 per cent.
The merged
x a week on JVTN®
ElectraMeccanica stopped
producing the three-wheeled
Solo after a recall that led to
a buy-back of all 429 vehicles
that had been sold since
2019. FILE PHOTO
executive, Docherty has
overseen major changes at
ElectraMeccanica in her short
tenure, culminating in the abandonment
of the company's threewheeled,
commuter EV following
a recall and buy-back of all
429 vehicles sold since 2019. The
company said at the time it would
pivot to four-wheeled vehicles.
U.S. PLANT KEY ASSET
Docherty:
" Tevva is the
right partner
with which
to pivot from
consumer
vehicles to
commercial
vehicles. "
FILE PHOTO
0% overall (26% new & 85% pre-owned). " Cliff Martin, Dealer
entity will retain the Tevva name
and focus on the company's lineup
of medium- and heavy-duty
electric commercial trucks.
ElectraMeccanica CEO Susan
Docherty said the " complementary "
European and North
American operations of the two
businesses will position the combined
company for growth.
" This is the right time and
Tevva is the right partner with
which to pivot from consumer
vehicles to commercial vehicles, "
she said in a release.
ElectraMeccanica was founded
in Vancouver in 2015. Though it
officially remains headquartered
in Canada, it has consolidated
most staff in Mesa, Ariz., where
it owns a 235,000-square-foot
(22,000-square-metre) assembly
plant. Details about the company's
future in Canada post-merger
were not immediately available.
&
sales consultants log in daily. Our sales are
The proposed deal is expected
to close in the fourth quarter
of 2023, though it still requires
several regulatory and investor
approvals, including the signoff of
both ElectraMeccanica and Tevva
shareholders. ElectraMeccanica
said it planned to hold a vote on
the proposed agreement in the
third quarter
Docherty, who joined
ElectraMeccanica in December
2022, is expected to head the combined
entity as CEO.
A former General Motors
The resulting company is
expected to operate as Tevva Inc.
and will be legally headquartered
in Delaware. It will also assume
ElectraMeccanica's NASDAQ listing
under a new ticker: TVVA.
The Mesa plant will be
among the combined company's
key assets. Tevva said the
site will complement the company's
existing 110,000-square-foot
(10,000-square-metre) truck plant
in the U.K., which began production
in January. The company did
not immediately share a timeline
for when the Mesa plant could
begin producing Tevva trucks but
said the site will allow it " to scale
its production to serve the U.K.,
European and U.S. markets. "
The ElectraMeccanica and
Tevva boards unanimously
approved the merger, which will
leave the combined entity with
between US $70 million and $80
million (Cdn $92 million to $106
million) in cash and debt of about
US $26 million (Cdn $34 million).
David Roberts, a member
of Tevva's current board, will
become executive chairman of
the combined company. - ANC
CREDITORS OF ONLINE USED-VEHICLE SELLER
Canada Drives voted to approve a plan to restructure
the company, which entered creditor protection this
year.
A Supreme Court of British Columbia judge
green-lighted the restructuring proposal in a
Vancouver courtroom Aug. 14, and 98 per cent of
creditors voted Sept. 11 to approve the plan.
Canada Drives sought relief under the
Companies' Creditors Arrangement Act (CCAA)
March 19, as it faced steep losses in its e-commerce
business, blamed on higher borrowing costs
and softening used-vehicle prices. At the time,
the Vancouver company said it would wind down
its used-vehicle unit and return to its roots as a
lead-generating business.
The plan presented to creditors finalizes the company's
restructuring along those lines, though it
comes at a steep cost to unsecured creditors.
Claims up to the amounts stipulated in the Wage
Earner Protection Program, costs related to the
CCAA process and unsecured claims of $400 or less
would be paid in full. Other unsecured creditors
will receive about 8.5 cents for every dollar claimed,
while equity claimants will receive nothing.
As part of the agreement, Goeasy Ltd., which is
Canada Drives' largest single creditor and sponsor
of the plan, will forgive $15 million of the $40 million
in promissory notes it is owed.
For the proposal to be implemented, a majority of
Canada Drives' affected creditors that represent at
least two-thirds of the value of the
claims needed to vote in favour of
the restructuring plan, which gave
Goeasy significant leverage.
The plan allows Canada Drives
to exit creditor protection with its
lead-generating business intact
and grants claimants amounts
" greater than would be available
to them " if assets were liquidated,
the company wrote in an application
to the court.
entered in
2020 was
" a challenge
from the
outset. "
The plan
is to focus
exclusively
on providing
sales
leads for
dealerships.
FILE PHOTO
'A CHALLENGE FROM THE OUTSET'
Canada Drives, Goeasy
and court-appointed monitor
PricewaterhouseCoopers Inc., held
" extensive negotiations " to finalize
the proposed plan, the company
added.
As of Sept. 11, Canada Drives
had 326 accepted claims valued
at roughly $59.4 million against
it, with one claim worth about
$750,000 still being disputed,
according to a report prepared for
the court.
The creditor-approved plan
bounces back to the court to
The Canada Drives restructuring plan grants
claimants amounts " greater than would be
available to them " if assets were liquidated, the
company wrote in an application to the court.
PHOTO: CANADA DRIVES
receive final sanction before being implemented.
Assuming the plan is finalized, current co-CEOs
Cody Green and Michael Galpin will hold the equity
in the restructured company, returning it to focus
exclusively on providing sales leads for dealerships.
Green described the used-vehicle sales business that
Canada Drives entered in 2020 as " a challenge from
the outset. "
The leads segment has remained profitable, he
said when the company filed for CCAA protection.
- ANC
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Automotive News Canada - September 2023

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