Burnaby's Loop Energy (TSX:LPEN), a hydrogen fuel cell company, plans to drastically cut staff and shut down a production facility in China to buy itself some runway.
“Due to challenging capital market conditions, including significant stock price declines in the hydrogen fuel cell sector since the beginning of the year, and after careful consideration of its alternatives, the board of directors has determined that it is in the best interests of the company to immediately execute an additional operating cost reduction program,” the company said in a material change report posted today on SEDAR.
“This program includes, among other things, an approximate 65 per cent global headcount reduction by the end of the year and the closing of production in China."
According to BIV’s most recent top 100 alternative energy companies list, Loop Energy employed 110 people in B.C. in 2023.
Loop Energy makes hydrogen fuel cell systems. The company went public in February 2021, with a $100 million initial public offering. Since then, its stock has steadily declined, from $16 per share on Feb. 25 to $0.23 on September 25.
“Tightening of capital markets continues to impact the company’s ability to raise funds and overall inflationary pressure have resulted in extended timelines for both new and existing projects,” the company said in its most recent management, discussion and analysis.
Loop has employed Credit Suisse to explore “strategic alternatives including partnerships, licensing opportunities, joint development and outsource opportunities, sale, and other ways to bring new capital, expertise and resources to the business.
"Following the public announcement of the strategic review and at the direction of the board of directors of the company, Loop conducted a comprehensive outreach to over 130 potential counterparties and while discussions are ongoing with certain parties, no offer or proposal is currently under consideration," the company said in a corporate update on September 19.
"The company estimates that the implementation of the operating cost reduction program will extend the company’s cash runway to the end of the first quarter, 2024. This will allow the continuation of the strategic review process and outreach to potential counterparties and engagement with parties that previously expressed interest.
"In addition, as part of the operating cost reduction program, the company will be reducing product shipments through to the end of the year and accordingly may not meet prior year revenues."
According to Loop's second quarter financials, the company posted a $15.5 million loss in the first six months of 2023, which was an improvement over the same period for 2022, when the company reported a net loss of $17.9 million.