Hyzon Halts Operations in Netherlands and Australia, Expects $17M Charges

Author: Benzinga Newsdesk | July 08, 2024 06:32am

On June 24, 2024, Hyzon Motors Inc. (the “Company” or “Hyzon”) issued a press release announcing that it had started realigning its strategic priorities to focus on the Company’s core North American markets and the refuse industry. As part of these efforts, the Company determined on July 7, 2024, to wind down its operations in the Netherlands and Australia.

 

In connection with the planned exit activities, the Company expects to incur charges of approximately $17 million, of which approximately $7 million is expected to be in cash. Components of the charges include non-cash inventory write-downs of approximately $7 million, employee-related costs of approximately $3 million, other exit related costs of approximately $4 million, and non-cash impairment charges of approximately $3 million. The Company expects to incur these costs in the second and third quarters of 2024 and make the related cash payments in the third and fourth quarters of 2024. Further, the Company anticipates derecognition of certain liabilities that may result in non-cash gains in the third and fourth quarters of 2024. The Company is presently unable to estimate these non-cash gains. The Company expects to complete the wind down of its operations in the Netherlands and Australia by the end of 2024.

 

In comparison to North American efforts to accelerate the hydrogen transition and adoption of zero-emission, fuel cell technology, government support for fuel cell-powered transportation in Europe and Australia has waned, including the disbandment in many European countries of hydrogen subsidies. Hyzon currently intends to maintain the potential to return to the European and Australian markets as a fuel cell system supplier to Original Equipment Manufacturers (OEMs).

 

Despite its decision to halt the Netherlands and Australian operations, the Company reaffirms its commitment, subject to its success with respect to capital raising and various other strategic alternatives, to better position its first-to-market, zero-emission single stack 200kW hydrogen fuel cell technology for North American Class 8 and refuse truck FCEV platforms – which will both be featured in significant large fleet trial programs throughout the United States and Canada this summer. Additionally, the Company continues to optimize its operations in China.

 

The implementation of the planned exit activities and the timing and estimated charges noted above are subject to certain assumptions and risks, including those described below. The Company may incur other or additional charges or cash expenditures not currently contemplated, or the cash charges currently contemplated could be greater than anticipated, due to unanticipated events that may occur. Should underlying assumptions prove incorrect or risks materialize, actual amounts and timing may differ materially from those expected. Any additional cash charges could heighten the liquidity risk described below.

 

Item 8.01 Other Events

 

Strategic Alternatives; Bankruptcy

The Company continues to pursue its previously disclosed efforts to secure capital via the capital markets and explore various other strategic alternatives. These alternatives include a sale of all or a portion of the Company, a divestiture of its Europe and Australia/New Zealand businesses and subsidiaries, cost reductions, liquidity management, a reduction in workforce and other significant corporate transactions. The Company is also evaluating the need to pursue bankruptcy protection or other in-court relief if its financing efforts or other strategic alternatives are not successful.

 

The Company can provide no assurances that these or other steps will result in the Company pursuing a transaction or that any transaction, if pursued, will be completed on attractive terms or at all. The Company has not set a timetable for the completion of any transaction and does not commit to comment further unless and until the Company enters into a definitive transaction agreement or otherwise determines that further disclosure is appropriate or necessary. Even if successful, the Company may need to pursue other measures, including (without limitation) one or a combination of such transactions and/or measures described above.

 

Nasdaq Compliance

On January 23, 2024, the Company received a letter (the “Notice”) from the listing qualifications staff (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that it was not in compliance with the minimum bid price requirement set forth in Nasdaq Listing Rules 5550(a)(2) (the “Bid Price Rule”) for continued listing. The Bid Price Rule requires listed securities to maintain a minimum bid price of $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) (the “Compliance Period Rule”) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days. The Notice had no immediate effect on the listing of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), which has traded on The Nasdaq Global Select Market under the symbol “HYZN.”

 

In accordance with the Compliance Period Rule, the Company has 180 calendar days to regain compliance. If, at any time before the end of this 180-day period, or through July 22, 2024, the closing bid price of the Common Stock closes at or above $1.00 per share for a minimum of 10 consecutive business days, subject to the Staff’s discretion to extend this period pursuant to Nasdaq Listing Rule 5810(c)(3)(H), the Staff will provide written notification that the Company has achieved compliance with the Bid Price Rule.

 

The Company has not yet achieved compliance with the Bid Price Rule. As a result, pursuant to NASDAQ Marketplace Rule 4450(i), on July 5, 2024, the Company applied to transfer the listing of its Common Stock from The Nasdaq Global Select Market to The NASDAQ Capital Market. Provided that it satisfies all of the criteria for such transfer, upon listing on The Nasdaq Capital Market, the Company will be afforded an additional 180 calendar days to regain compliance with the Bid Price Rule, subject to Nasdaq’s ability to shorten such 180-day period under certain circumstances.

Posted In: HYZN