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Northern Genesis SPAC Rallies On Lion Electric-Amazon Deal Confirmation

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Northern Genesis SPAC Rallies On Lion Electric-Amazon Deal Confirmation

Northern Genesis Acquisition Corp (NYSE: NGA) shares are rallying on news the company has a deal with Amazon.com (NASDAQ: AMZN) for electric vehicles and an equity stake.

What Happened: Lion Electric is set to go public with SPAC Northern Genesis Acquisition Corp. The company issued an SEC filing last week that showed the company has a deal in place with Amazon.

The filing calls for the purchase of up to 2,500 Lion 6 and Lion 8 electric trucks from Lion Electric. Amazon Logistics is listed as the specified customer after being unnamed in previous Northern Genesis filings.

Under the terms of the deal, Lion Electric is required to reserve a portion of its manufacturing capacity for up to 500 trucks per year from 2021 to 2025. The deal calls for Lion Electric to provide the greater of 500 trucks per year of 10% of manufacturing capacity from 2026 to 2030.

Lion Electric will also provide maintenance and training to Amazon.

Related Link: 10 SPAC Picks For Investors To Consider In 2021

Why It’s Important: Lion Electric had previously signed a deal with Amazon for 10 Lion 6 trucks and has delivered two.

The SEC filing includes an option for Amazon to purchase common shares of Lion Electric at $5.66 and warrants to purchase shares at $23.36. The full vesting of the warrants requires spending by Amazon of at least $1.1 billion annually. Amazon could own 20% of Lion Electric in the future with its ownership options.

As part of the deal, Amazon is not required to purchase a “specified minimum quantity of vehicles from Lion” other than the existing purchase order.

Lion Electric said it had 300 purchase orders in hand and identified 6,000 potential vehicle sales at the time of its SPAC merger announcement. The company sees 2021 revenue hitting $204 million from 650 units sold and 2023 revenue hitting $1.67 billion from 7,580 units sold.

NGA Price Action: Shares of Northern Genesis were up more than 12% in early Monday trading.

Disclosure: The author has a long position in shares of NGA.

 

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