UK electric van maker pursued by creditors

Arrival forced to fend off winding-up petition by Coventry-based firm amid collapse in its share price

A BRITISH electric van champion once valued at $13bn has been forced to fight off legal action by a creditor as it grapples with a collapsing share price.

Arrival, which is listed on the US stock market, was hit with a winding-up petition by a supplier over an alleged unpaid debt.

The legal demand, which has since been withdrawn, sheds fresh light on the challenges faced by Arrival ahead of a $50m (£41m) fundraising last week. The company is cutting 800 jobs – more than half its staff – as part of efforts to reduce its cash burn to $10m a month.

Coventry-based steel fabrication company LFE Engineering filed the petition, where a creditor demands a court shut down a company for missed payments, last month.

Andy Smith, a director at LFE, said it had resorted to legal action against Arrival because it “couldn’t get any money out of them”, adding this was the first time his company had used a petition in about 10 years. He said that invoices of around £12,500 had since been repaid.

The disclosure comes as Arrival undergoes a restructuring, abandoning plans for a large-scale van factory in Oxford in favour of opening in the US.

It follows a dramatic reversal of fortune for the business, which was hailed by the then prime minister Boris Johnson as one of a so-called green dozen of eco-friendly start-ups in 2021.

Arrival floated in New York two years ago with a $13bn valuation and plans for a network of van-building “microfactories” in hundreds of cities worldwide. At the time, the company claimed it would be able to produce electric vehicles for 50pc less than rivals and had come up with a manufacturing model “as scaleable as Mcdonald’s or Starbucks”.

However, Arrival’s total market value has since collapsed to just $170m amid questions over the viability of its ambitions and a wider rout in tech stocks. Its stock now trades at 27 cents, down from highs of more than $31, and it has been threatened with delisting by the Nasdaq index after falling below $1 per share.

Founded in 2015 by Russian entrepreneur Denis Sverdlov, Arrival has spent heavily on developing novel materials for building lightweight electric vehicles and securing patents for production processes.

The company’s first productionready van rolled off its robotic assembly line in the UK in September after months of delays. Weeks later, Arrival announced a change in strategy that will see its main production plans shift to Charlotte, North Carolina, where it can claim additional incentives under Joe Biden’s green agenda. The company has a deal to produce electric vans for UPS and is designing a green ridehailing car with Uber.

Arrival’s Bicester factory will now only produce a small number of vans to support trials and testing. Accounts for its UK entity are now two months late.

Companies across the electric vehicle industry have faced plunging shares as interest rates rise and the flow of cheap venture capital money dries up amid growing economic gloom.

Soaring energy costs and high upfront prices have also dampened consumer demand for electric cars as buyers hold off on making purchases.

Would-be electric car battery maker Britishvolt filed for administration last month and has been bought by Australian business Recharge Industries.

In November, Arrival issued a going concern warning to US markets, stating it did not have enough cash on hand to survive the next 12 months. The company said it had cash and equivalents worth about $330m, and lost $310m in the three months to September. By the end of December, it had just $205m cash on hand. It has since implemented a cost-cutting drive, aiming to bring down its burn rate to about $30m per quarter, and appointed Teneo to advise on future options.

Last week, Arrival said it had restructured some of its borrowing with a debtfor-equity swap with one of its biggest lenders. It raised $50m from investor Antara Capital, at a discount to its current share price, and swapped $122m in debt into stock.