Hyliion Hauls In $142 Million From Sale Of Stock Warrants

Startup hybrid electric truck driveline maker Hyliion Holdings HYLN is $142 million better off following the sale of shares converted from warrants issued by the blank check company (SPAC) that brought Hyliion public.

Interestingly, Hyliion doesn't need the money to run the business. Its reverse merger with Tortoise Acquisition Corp. in October 2020 gave Hyliion $520 million after expenses to fund its business plan.

"This incremental capital allows us to pursue additional partnerships and M&A activity that we may not have considered previously," CEO Thomas Healy said in a press release Thursday.

The warrants acted as a sweetener to early investors who bought in shares in Tortoise. Each full warrant could be exchanged with $11.50 for a share of Hyliion stock after the business combination on Oct. 3.

Hyliion shares have traded above $50. Even at Friday's closing price of $17.27, shares resulting from the warrants were in the money. More than 98.5% of the warrants issued in February 2019 were exchanged for 12.5 million shares of Hyliion stock. The remainder expired on Dec. 30.

Business moves ahead

The share price has little impact on Hyliion's plans to begin early production of its ERX Hypertruck later this year. The ERX is a hybrid system consisting of an electronic axle and a natural gas-powered generator that makes electricity to charge the battery on Class 8 trucks. Proprietary software monitors energy use, routing and other functions.

"We view this as a solution we can offer our long-haul customers. We think [Hyliion's] systems paired with our motors, inverters, and eAxles can meet their immediate needs for fuel efficiency," Ryan Laskey, Dana Inc. senior vice president, commercial vehicle drive and motions systems, told FreightWaves.

Dana DAN was an early investor in Hyliion.

If the generator uses renewable natural gas (RNG), Hyliion expects it will record below net-zero greenhouse gas emissions. 

So far, Hyliion has booked no revenue, deciding against recording $1 million from 20 electronic axle systems for diesel and natural gas trucks.  

"We see a tremendous number of opportunities in the transportation sector that are ready to participate in this electrification transformation," Healy said. 

Maybe even hydrogen

"Over the next year, we will explore additional technologies and business strategies that could range from improving our existing solutions, RNG expansion, hydrogen development, improved battery solutions, expanding our product portfolio and more," Healy said.

For its one customer that requested a hydrogen-powered generator, Hyliion is partnering with French automotive fuel cell systems maker Faurecia and Symbio, a joint venture of Faurecia and Michelin, for fuel cell technology and production.

"Renewable natural gas makes a ton of sense. The costs are just so much lower than diesel and hydrogen. So, I'm long on renewable natural gas," Healy said in an interview with FreightWaves on Aug. 31. "The thing I still can't wrap my head around is the cost [of hydrogen]."

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Click for more FreightWaves articles by Alan Adler.