(This June 6 story has been corrected to say Arrival reduced its headcount by 50% in the first quarter, in paragraph 4)
(Reuters) – Arrival said on Tuesday it will convert shareholder hedge fund Antara Capital Master Fund LP’s $20 million loan into equity, a move that would help the British electric-vehicle startup lower its debt load.
According to the deal, Antara will not be allowed to sell more than 10% of the traded volume of Arrival’s ordinary shares, it receives in the exchange, on any given trading day. Antara has a 1.69% stake in Arrival, according to Refinitiv data.
After the exchange, Arrival will still have about $300 million of principal amount in convertible notes that can be converted into equity.
Cash-strapped Arrival, which saw its cash and cash equivalents slump at the end of the first quarter, has been exploring options and reduced its headcount by 50% during the first quarter to tackle a fund crunch it has been facing.
EV firms have been experiencing a cash problem over the past few months, as high costs related to production ramp-ups and soaring inflation eat into their reserves.
Arrival in April effected a 1-50 reverse stock split to regain compliance with Nasdaq’s listing rules and said it will merge with blank-check firm Kensington Capital Acquisition Corp V to raise cash.
(Reporting by Tiyashi Datta in Bengaluru; Editing by Anil D’Silva and Shinjini Ganguli)