Canoo Sues Chinese Investor For $61 Million As It Struggles To Stay Alive
Arkansas-based Canoo is an EV startup that seems to be barely alive. In an effort to stay that way it just sued one of its prominent investors to the tune of $61 million. If it wins the suit the sum would significantly increase the funds the company says it has on hand in cash and cash equivalents as of March 31, 2022.
A Cayman Islands firm called DD Global Holdings and its beneficial owner Pak Tam Li are the target in the suit filed by Canoo over so-called ‘short swing’ profits according to Bloomberg.
DD Global Holdings was one of the largest shareholders of Canoo but due to connections with the Chinese government, they were required by a national security agreement to own 10 percent or less of the company by February 28, 2022.
Canoo believes that despite a number of transactions involving the shares, DD Global Holdings is in violation of that agreement and may have withheld other transactions as well. After Canoo’s stock nearly doubled late last year it dropped back down to less than half of its value at the start of 2022.
The company said in recent earnings filings that it lost some $125 million over the first few months of 2022 and has just $104.9 million in cash or cash equivalents on hand as of March 31, 2022. That same earnings report had some pretty damning language about the viability of the company itself too, stating that “There is substantial doubt about the Company’s ability to continue as a going concern.” It’s one thing for critics or rivals outside of a company to claim such things and a totally different one for the startup itself to acknowledge it.
At the same time, Canoo says that it does have enough capital, some $600 million, to begin production which was planned for this year. Initially, it had planned to build somewhere between 3,000 and 6,000 vehicles this year. From what these reports sound like it would seem as though they need to get started as quickly as possible to alleviate concerns about its future.