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Exro Technologies Inc. EXRO-T and a number of investment banks are facing a shareholder lawsuit alleging the electric-vehicle tech developer overstated its prospects following a $332-million takeover early this year , leading it to write down more than half the deal’s value. The proposed class action claims Calgary-based Exro misrepresented the outlook for revenue after its acquisition of SEA Electric.
The plaintiff in the case said in the statement of claim it does not appear Exro and SEA had a strong order book, as Exro asserted at the time of the deal, or that orders were not secured or legally binding. The suit names Exro, its chief executive officer Sue Ozdemir and chairman Rodney Copes as defendants. It also names underwriters of about $55-million in financings this year: Canaccord Genuity Corp.
, Eight Capital, National Bank Financial Inc., ATB Securities Inc., Stifel Nicolaus Canada Inc.
, Roth Canada Inc. and AGP Canada Investments ULC. The action, brought by retail investor Allan Crosier, seeks to bring together other investors who suffered losses or damages as a result of the alleged misrepresentations, according to the statement of claim.
Mr. Crosier is represented by Jensen Shawa Solomon Duguid Hawkes LLP and KND Complex Litigation. The allegations have not been proven in court.
In a statement, Exro disputed the allegations and said it intends to defend itself vigorously. Company officials did not respond to requests for comment. The court action comes at a difficult time for Exro, whose technology is designed to boost the efficiency and power of electric motors for cars, trucks and motorcycles.
It counts Stellantis STLA-N , Linamar Corp. LNR-T and Hino Motors among its partners. Earlier this month, the company reported it was tracking well below the sales projection it had set for 2024 after announcing the deal to acquire California-based SEA.
In addition, it recorded a $226-million net loss, which included a one-time goodwill impairment of $211-million, largely related to the acquisition. Exro said in its financial statement it had $14-million of cash and equivalents at the end of the quarter, and $36-million of accounts payable and other liabilities due over the next year, and that it will require additional financing in the next 12 months to fund its operations. It said it had reduced its work force and warned there were “material uncertainties that may cast significant doubt on the ability of the company to continue as a going concern.
” Since announcing the deal with SEA in January, the stock has lost 85 per cent of its value. It closed at 15 cents on the Toronto Stock Exchange on Thursday. SEA developed technology that controls all the components that electrify a vehicle.
At the time of the deal announcement, Ms. Ozdemir said the two companies’ products were complementary, and the deal allowed the combined entity to offer an integrated set of products. In March, the company said it was preparing to deliver more than 1,000 of its propulsion systems to blue-chip manufacturers in 2024, targeting annual revenues of more than $200-million.
In the nine months to Sept. 30, revenues totalled $16.3-million.
The plaintiff said in the court document he believes Exro cannot claim the protection of inherent uncertainty surrounding forward-looking statements because it had no basis for making optimistic projections..
