ElectraMeccanica, Tevva to combine in plan of arrangement

ElectraMeccanica and Tevva announced that they have entered into a definitive arrangement agreement, pursuant to which ElectraMeccanica and Tevva have agreed to combine by way of a British Columbia statutory plan of arrangement. The attending members of the boards of directors of both companies unanimously approved the proposed transaction. The proposed transaction with ElectraMeccanica and Tevva is the culmination of a formal process initiated by ElectraMeccanica’s board of directors to explore a range of possible strategic alternatives for optimizing ElectraMeccanica’s assets and generating sustained shareholder value while still managing potential risks. Upon the closing of the proposed transaction, ElectraMeccanica shareholders will own 23.5% of the combined company and Tevva shareholders will own 76.5% of the combined company on a fully diluted basis. The combined company expects to have a cash balance of approximately $70M-80M, with debt of approximately $26M. At closing of the proposed transaction, the combined company will operate as Tevva, Inc., and is expected to be domiciled in Delaware. It is anticipated that the combined company and its shares will trade on The Nasdaq Capital Market under the ticker symbol TVVA, subject to the receipt of all applicable Nasdaq approvals. The combined company is expected to benefit from the acceleration of Tevva’s U.S. market entry, supported by the complementary platform, team, and assets of ElectraMeccanica, in addition to anticipated long-term reductions in material costs. The transaction is also expected to deliver approximately $5M in run-rate annual cost savings by year-end 2024. The board of directors of the combined company will consist of nine directors, comprising five directors from Tevva and four directors from ElectraMeccanica, of which seven are expected to be deemed independent. The senior executive team of the combined company will reflect the significant talent and experience at the leadership level of both companies. Following the completion of the proposed transaction, it is expected that Susan Docherty will become CEO of the combined company. The proposed transaction will be completed, subject to the definitive arrangement agreement, by way of a court-approved plan of arrangement under the Business Corporations Act, whereby a newly formed British Columbia corporation, created to manage and hold the combined business of ElectraMeccanica and Tevva, will, directly and indirectly, acquire all of the issued and outstanding equity securities of ElectraMeccanica and Tevva. In addition, concurrent with the announcement of the proposed merger, the board of ElectraMeccanica has approved, under certain conditions, the provision of a $6M credit facility to Tevva which can be drawn in whole or in part until the closing of the proposed transaction. If drawn, the credit facility is intended to provide Tevva with additional working capital to accelerate delivery of commercial vehicles to fleet customers. The proposed transaction is expected to close in Q4, following the satisfaction or waiver of closing conditions, including, among others, required approvals of ElectraMeccanica’s and Tevva’s shareholders of the proposed transaction, the approval of the Supreme Court of British Columbia of the proposed transaction, and the conditional approval for the shares of the resulting Issuer to be listed on of Nasdaq. All officers and directors of ElectraMeccanica support the transaction and have entered into support and voting agreements for all of their shares, including ElectraMeccanica’s founder and largest shareholder. This cumulatively represents 9.67M shares, or approximately 7.89% of ElectraMeccanica’s outstanding shares. In addition, the aforementioned ElectraMeccanica shareholders and key shareholders of Tevva, have entered into lock-up agreements in connection with the proposed transaction, which will subject them to a 180-day restricted period, subject to certain release exemptions based on the trading level of the combined company’s stock price.