Distressed Ebusco takes out multi-million dollar loan to overcome financial problems

Electric bus manufacturer Ebusco has once again had to take out a multi-million loan due to financial problems. Three parties are lending a total of 22 million euros to the troubled manufacturer from Deurne. In recent weeks, the company has not even been able to pay the 'final settlement' of former employees (think of paying out vacation days), according to research by NRC .

Ebusco has been struggling with financial problems for some time. Due to a shortage of parts and the fact that the relocation of part of the production to China did not go well, it was unable to deliver dozens of buses on time in recent years. Various transport companies then terminated contracts for deliveries. For example, Qbuzz cancelled an order for 59 buses and Keolis one for 50 buses. In addition, Ebusco had to pay fines for not meeting the obligation to deliver on time.

All this caused acute financial problems for the listed company last autumn. There was no money left in the short term to restart production and make other payments. The company raised new money via an additional share issue of 36 million euros.

But the problems were not over yet. Ebusco announced in November last year that it would have to take extra measures to absorb a cash shortage in the first quarter of 2025. For example, several bills could not be paid. And at least nine employees who left recently were not paid on time, according to conversations NRC had with sources close to the company. This involves a thousand to several thousand euros per person.

Those who came to seek redress were told that there was a “technical problem”. Banks were unable to execute payment orders for weeks. When a former employee asked further, he was told that there was not enough money to pay the final settlement, he told NRC. This person wishes to remain anonymous, because he still works in the same industry and still has dealings with Ebusco in this role. In a response, Ebusco confirmed the payment problem, but said that “something went wrong with the processing of the payments”.

The nine ex-employees prepared legal action against Ebusco, but the company finally settled the bills last week. Parts of the company inventory, such as laptops of departed employees, were sold to solve the cash problem.

Urgent need

The fact that Ebusco was in dire need is also evident from the conditions under which the loan of 22 million euros was taken out. The three providers – the American Heights Capital, the Dutch investor De Engh, and Green Innovation from Taiwan – receive no less than 10 percent interest on the money they provided, which is a heavy burden for the bus manufacturer. Moreover, the loan must be repaid in August. If that fails, part of the loaned money can be converted into shares in the company.

That could be bad news for investors: in November they had to watch as their stake was diluted by the additional issuance of shares. The company's share price has also completely collapsed in recent times. While a share was worth 55 euros in July 2022, it is now worth around 62 cents.

Christian Schreyer, who took office last year and replaced founder Peter Bijvelds, had previously announced a restructuring program. Factories in Deurne and Venray – where vehicles produced in China are assembled – will be merged. More than 100 of the 602 employees will also have to leave.

Buyer found for buses

With the loan announced on Monday, Ebusco wants to further expand Chinese production. CEO Christian Schreyer states in an explanation in the press release that "this new liquidity injection will enable us to get our backlog in bus production and bus deliveries going again". In this way, the company should again provide for its own income.

Ebusco announced on Monday that it had found a buyer for part of the order that was cancelled by Qbuzz. Transport company EBS, which is mainly active in the west of the country, is taking over 31 buses. Earlier, the French Métropole Rouen Normandie ordered 22 buses and the German NIAG 21.

On the other hand, 55 buses have been cancelled this year. An Ebusco spokesperson did not want to say anything about why this happened on Monday.