A $40 million breath of fresh air for Taiga

Quebec manufacturer Taiga produces snowmobiles and all-electric personal watercraft.

The Quebec manufacturer of electric snowmobiles and personal watercraft Taiga announced on Friday that it had reached an agreement for a private placement of $40.15 million in debentures which should allow the young company, battered by the economic disturbances, to ensure the growth of its activities.

In a press release, the management of Taiga explains that this sum will be invested respectively by the company Northern Private Capital (NPC), up to 25.15 million million, and by Investissement Québec (IQ), which will provide $15 million.

The investments will be in the form of debentures which can be converted by NPC and IQ into common shares by March 31, 2028, should they wish to convert their investment into an equity interest in the company. Additional investment options of $5 million and $2.5 million under the same terms have also been granted to NPC and IQ respectively.

A debenture is a debt security that companies or governments issue to obtain long-term financing without having to provide other guarantees than their solvency and reputation. This method of financing is often used by young companies to ensure their growth.

But that's not all: in exchange for these 40 million dollars, the young company also gives control of four seats on its board of directors.

Taiga has agreed, as soon as possible, […] to reconstitute its Board of Directors and it has granted one seat to a member nominated by IQ, two seats to representatives of NPC and one sits on an independent member appointed by NPC, the company said in a statement.

Founded in 2015 by three mechanical and electrical engineering students from McGill University, Taiga designs and produces fully electric snowmobiles and personal watercraft at its Montreal plant.

The EKKO snowmobile model built by Taiga Motors has a range of one hundred kilometers per charge.

Having benefited from several tens of millions of dollars in financial commitments from governments – notably for the construction of a new factory in Mauricie – Taiga has had its share of difficulties in recent years due in particular to disruptions in the supply chain and the availability of parts.

The young, growing company has seen its cash flow melt away in recent months. If, in the summer of 2022, Taiga could count on more than $52.4 million in cash, as of December 31, 2022, the company had only $22.8 million left in its coffers. By the end of February, it was down to just 8.3 million.

This $40 million in new money is therefore timely for Samuel Bruneau, CEO and co-founder of Taiga, who shows great confidence in the commercial potential of his products.

“These funds will help us achieve our vision and enable us to invest in accelerating our our production, protect our supply chain and sustain our business as we build the next generation of all-terrain electric vehicles. »

— Taiga CEO and Co-Founder Samuel Bruneau

Taiga's Nomad snowmobile and Orca watercraft have proven to be a hit with our customers, and the innovative technology that underpins them -tend earned them many prestigious accolades in their first year of production. There are great opportunities ahead, he points out.

Despite the enthusiasm for electric vehicles, Taiga's cautious management has withheld its expansion plans to protect its capital, in particular by postponing the opening of its new plant in Shawinigan, Mauricie.

< p class="e-p">The project, which was supposed to see the light of day in 2022, finally had to be postponed to 2023, with a view to going into production in 2024.

Recall that Taiga has obtained financial commitments worth nearly $50 million from the federal government, the government of Quebec and the City of Shawinigan to carry out this project.

The manufacturer currently operates a plant in Montreal with a production capacity of 8,000 vehicles . The second plant he plans to build in Shawinigan should bring the company's total production capacity to 70,000 vehicles.

For the moment, production remains more modest. Last November, Taiga estimated it would be able to deliver 2,500 to 3,500 vehicles in 2023, saying production plans have been disrupted in 2022 by component availability issues. The company nonetheless believed that it would be able to ramp up the pace of production by the end of the year.