Bankrupt EV bus manufacturer Proterra is facing a class-action lawsuit alleging it repeatedly concealned an increasing risk of insolvency after merging with a SPAC in June 2021.
The firm Levi & Korsinsky brought the suit, seeking to recover losses on behalf of Proterra investors who were adversely affected by the alleged securities fraud between Aug. 2, 2022 and March 15.
According to the complaint, on March 15, Proterra announced quarterly earnings. In that announcement, the Company stated they were in violation of a liquidity clause in their secured convertible notes and that they may have to qualify an audit report with a “going concern” clause.
The financial issues stemmed from an increase in cash burn because of a decrease in gross margin and an increase in accounts receivable during the relevant quarter, the suit alleges. In response to the announcement, Proterra’s stock price dropped from $2.51 per share to $1.16 per share, erasing approximately $118 million in market capitalization in one day.
The complaint alleges that defendants made false and/or misleading statements and/or failed to disclose that: the company repeatedly stated the funds on their balance sheet meant the company had abundant liquidity and financial stability; and the new factory in Greer, SC, would continue to improve production efficiency and gross margins.
Proterra merged with ArcLight Clean Transition in a deal valued at $1.6 billion. Proterra gained $648 million in cash from the merger, including $278 million held in trust at ArcLight and a $415 million PIPE. Read more.
