The startup automaker is expected to launch its Ocean SUV in late 2022. The model will be manufactured by Magna International Inc. at Magna’s plant in Graz, Austria. In June, Fisker inked a revised deal to extend its production of the Ocean through 2029.
Fisker’s notes offering is significant because it indicates the company is lining up cash to produce a second vehicle as well as others on the drawing board.
Fisker could sell an additional $100 million in notes to institutional buyers during a window that extends through the end of August. The notes will pay 2.5% interest annually and mature Sept. 15, 2026.
“We are executing on our plan and on our commitments to our stakeholders,” Henrik Fisker, chairman and chief executive, told the Business Journal in a statement. “We have laid out a compelling roadmap for the growth of the company, and I look forward to showing the production version of the Fisker Ocean, as planned, later this year.”
Fisker is flush with cash — it had $962 million on its balance sheet in the 2021 fiscal second quarter that ended June 30 — but the company wants to raise debt to pay for several projects that are underway. The cash in Fisker’s treasury is largely dedicated to the Ocean.
The company said it intends to use net proceeds of the $625 million notes offering 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 Foxconn Technology Group signed a memorandum of understanding to jointly develop what Fisker has labeled a “breakthrough electric vehicle,” codenamed Project PEAR, or Personal Electric Automotive Revolution.
Foxconn is a Taiwanese electronics contract manufacturer and a subsidiary of Hon Hai Precision Industry Co. Ltd.
A Fisker spokesman emphasized that the $600 million debt offering is intended for PEAR production and other projects — not the Ocean.
“It’s significant because other EV startups also have gone to the capital markets to raise funds, like Tesla and Neo. This shows our appetite for growth and our intention to launch multiple vehicle lines, like Ocean, PEAR and other vehicles,” the spokesman said. “This is about PEAR and beyond.”
PEAR will be built by Foxconn and sold under the Fisker brand in North America, China and Europe. Production on the PEAR vehicle is expected to start in late 2023 or early 2024. It will have a starting price of $30,000 before incentives.
Fisker is reviewing locations to manufacture the PEAR in the United States, the spokesman said. Company executives recently visited Foxconn’s site in Mt. Pleasant, Wis., which is on a short list of possible production locations, he said.
“We will make a decision before the end of the year,” the spokesman added.
The Ocean will debut at the Los Angeles Auto Show in November and will have a starting price of $37,499, the spokesman said.
Morgan Stanley analyst Adam Jonas recently resumed coverage of Fisker with an “overweight” rating on the stock and a $40 price target.