EV Startup Fisker Inc. Announces a $600 Million Green Convertible Senior Notes Offering

author: Eric Walz   

The electric Fisker Ocean SUV will enter production in 2022.

California-based Electric vehicle startup Fisker Inc. today announced its intention to offer $600,000,000 of its Green Convertible Senior Notes to qualified institutional buyers. 

Fisker also expects to grant the initial purchasers of the notes an option to purchase up to an additional $90,000,000 aggregate principal amount of the notes within a 13-day period beginning on the date the notes are first issued.

A convertible note is a type of short-term debt that the holder can convert into equity in the company its purchased from. Issuing senior convertible notes is a popular way for companies to raise funds from investors. 

For Fisker, this method of financing is fairly easy to execute. In addition, the process of issuing the notes is relatively inexpensive and it allows young companies to gain quicker access to the investor funds.

The notes will be senior unsecured obligations of Fisker, and interest on the notes will be payable semiannually in arrears on March 15 and Sept 15 of each year, beginning on March 15, 2022. 

The senior notes will mature on Sept 15, 2026, unless converted, redeemed or repurchased. 

Fisker said the notes will be convertible under certain circumstances into cash, shares of Fisker's Class A common stock, or a combination of both, at the company's own discretion. Fisker announced that the interest rate, initial conversion rate and other terms of the notes are to be determined upon pricing of the offering.

Fisker intends to use the net proceeds of the notes to finance "eligible green projects", including its "PEAR" program development, battery pack assembly, new model development and other technology advancements.  Fisker also intends to use the net proceeds for working capital and general corporate purposes.

In February, Fisker and Apple's contract manufacturer Foxconn signed a Memorandum of Understanding (MOU) to jointly develop what Fisker calls a "breakthrough electric vehicle" codenamed "Project PEAR" (Personal Electric Automotive Revolution). 

The electric vehicle will be built by Foxconn and sold under the Fisker brand in North America, China and Europe. Projected start of production is Q4 2023.

The PEAR project will be Fisker's second vehicle, following the launch of the Fisker Ocean SUV in Q4 2022.

The fully-electric Ocean SUV gets its name from the use of recycled plastics throughout the vehicle's interior. Most of the interior materials are made from plastic waste collected from the ocean that would otherwise become pollution and hazards for marine life, including plastic bottles and fishing nets. 

Last year, Fisker said prices for the Fisker Ocean will start at just $37,499. It will also be eligible for the Federal EV tax credit of $7,500. 

The entry level Fisker Ocean will deliver 250 miles of minimum range, according to Fisker. The electric SUV will come equipped with a solar panel roof which the company claims will deliver roughly 1,000 miles of additional range over the course of a year.

In Oct 2020, Fisker closed its deal with Magna International division Magna Steyr to build the Ocean SUV at its factory in Austria. Magna International will supply the vehicle platform and Magna Steyr will assemble the vehicle. It will be Magna's first contract manufacturing agreement with an EV startup. 

Over the years, Magna Steyr has become one of the world's biggest automotive parts suppliers and vehicle contract manufacturing partners. It has built popular vehicles for automakers, such as the BMW X3 SUV and vehicles for Mercedes Benz E-Class vehicles equipped with the automaker's 4-Matic all-wheel-drive system. Magna Steyr's factory also produced the electric Jaguar I-Pace SUV. 

California-based Fisker, which was founded in 2016, is among a new crop of electric vehicle startups, including Lucid Motors and Rivian that are aiming to capture some of the success of Tesla, which over the last decade has grown to become the world's most valuable automaker.

Fisker founder and CEO Henrik Fisker is an automotive industry veteran and is best known for designing iconic luxury cars, including the BMW Z8 and Aston Martin DB9. Now he leads the company that bears his name.

Fisker is billing itself as "the world's first digital car company."

Fisker launched its U.S. IPO in Oct 2020 through a merger with special purpose acquisition company (SPAC) Spartan Energy Acquisition Corp. Fisker's shares are listed on the New York Stock Exchange under the symbol "FSR". 

Eric Walz

Originally hailing from New Jersey, Eric is a automotive & technology reporter covering the high-tech industry here in Silicon Valley. He has over 15 years of automotive experience and a bachelors degree in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the auto industry and beyond. He has worked at Uber on self-driving cars and as a technical writer, helping people to understand and work with technology.