Westport Fuel Systems obtains access to more than $40 million to improve liquidity

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      A Vancouver-based high-tech company has extended its financial runway by tens of millions of dollars during the pandemic.

      On Friday (July 24), Westport Fuel Systems announced that an Italian subsidiary, MTM, has obtained a $25.8-million loan from UniCredit. (This was announced as £10 million.)

      The loan repayable over six years and will help improve liquidity, according to a company statement.

      The money is being advanced under the Italian government's liquidity decree.

      “The need for affordable, market-ready, and clean transportation is as urgent as ever and the economic advantage of gaseous fuel vehicles are a critical part of a green recovery post COVID-19 in Europe and around the world," Westport Fuel Systems executive vice president of transportation, Massimiliano Fissore, said.

      This came a day after Export Development Canada provided Westport Fuel Systems with a $13.4-million credit facility "to bolster liquidity". (This was announced as US$10 million.)

      It means Westport Fuel Systems obtained access to more than $40 million over two days.

      Westport supplies advanced fuel-delivery components and systems to automotive companies using low-carbon fuels, such as natural gas, renewable natural gas, propane, and hydrogen.

      it's a 50 percent shareholder in Cummins Westport Inc., which experienced a $15.6-million revenue decline in the first three months of 2020, compared to the same period in 2019.

      Cummins Westport sold 1,513 engines in the quarter, compared to 1,991 in the first three months of 2019.

      In the three months ending on March 31, Westport Fuel Systems' consolidated revenues were $67.2 million. That was eight percent below the same quarter last year.

      The company posted an adjusted quarterly loss of $3.6 million before income tax, depreciation, and amortization. That compared to adjusted earnings of $7.3 million in the same quarter of 2019 before income tax, depreciation, and amortization.

      This metric does not reflect the company's actual cash expenditures, it noted.

      “While we expect the financial impact of COVID-19 to be more acute in the second quarter, due to the business and operational interruptions we experienced, the safe and efficient restart of production signals the start of recovery," CEO David M. Johnson said on June 4. "Despite near-term uncertainty, macro trends and regulatory developments are proof points of persistent market fundamentals for our clean transportation solutions.”

      This company video explains how Westport Fuel Systems' technology functions.

      Company pays down some convertible notes

      On July 24, Westport Fuel Systems also announced that it has refinanced convertible notes held by funds associated with Pangaea Two Management LP and Cartesian Capital Group.

      The Vancouver company will pay down the principal from US$17.5 million to US$10 million.

      That, in turn, will coincide with extending the maturity of the existing notes by three years from the date of the amendments. In addition, the coupon rate will fall from 9 percent to 6.5 percent per year.

      Moreover, the conversion price will be slashed from US$2.17 per share to US$1.42 per share.

      “The refinancing of our convertible notes with Cartesian reduces our cost of capital and extends the maturity to 2023 to better align with the growth of our HPDI business,” Johnson said.

      On July 24, Westport Fuel Systems' share price rose 11.48 percent on the Toronto Stock Exchange, closing at $2.04. Its market capitalization stands at $278.66 million.