Ebusco loses crucial court case against Qbuzz and gets closer to insolvency

Bus operator Qbuzz was allowed to terminate an agreement with bus manufacturer Ebusco and therefore does not have to purchase 45 electric buses. The news has been reported first on De Rechtspraak and on the Telegraaf. Reportedly, this was decided on 23th October afternoon in Utrecht by the preliminary judge of the Central Netherlands District Court.

UPDATE 24TH OCTOBER, 11.45
Ebusco states that “On 17 October 2024 a pre-judgment attachment was placed on some of Ebusco’s bank accounts. In agreement with Qbuzz, the attachments have been lifted. This allows Ebusco to access its bank accounts again“

Two days ago, Ebusco announced it has initiated legal proceedings against a not mentioned customer (it became then evident it’s Qbuzz) for payment for 45 buses. The Dutch company also said it has largely suspended its production in anticipation of the outcome of the court hearing and the completion of the contemplated rights issue “to preserve its working capital”.

Ebusco said in September that it plans to raise up to EUR 36 million through a rights issue offering. The shareholder meeting will be tomorrow, but today’s judgement makes a positive outcome quite difficult. On Thursday morning (tomorrow), Ebusco will also publish third-quarter figures for 2024.

Ebusco itself stated on 21st October that “Losing the order would put a significant strain on its working capital position”.

Ebusco shares have today a value of 0.50 €, and witnessed a -91% decrease in the last 12 months. The loss compared to the time when the company went public (October 2021) is -98%, as Ebusco’s shares value at that time was around 23 euros.

Ebusco is close to insolvency

The judgement, according to the medie, stated that “Ebusco did not comply with the settlement agreement that the parties concluded“. Therefore, bus operator Qbuzz is fully allowed to cancel the order (as other operators such as Connect Bus and Keolis already did before for the same reasons). In addition, “there is also a serious suspicion that Ebusco will not fulfill its obligations under the agreement”.

Speculations about Ebusco’s insolvency are gaining space. The company’s half 2024 financial results show EBITDA loss of €60.7 million (increased 40% compared to 43 in 2023) and revenue at €38 million (-8.8%). Just 98 buses were delivered, vs a order book of as many as 1,662 buses. “Scaling up with contract manufacturers has been hampered by start-up inefficiencies”, said the company, that is pivoting to a new strategy based on assembly of 3.0 model in China being made by a external partner, as stated during the presentation of 2023 results in March this year.

Also, Ebusco‘s Supervisory Board has appointed Christian Schreyer as new CEO in the framework of the turnaround plan put in place by the company’s Executive Team. Founder Peter Bijvelds and Michiel Peters stepped down as Co-CEO’s on 2nd September.

Back to Qbuzz’s deal, the order dates back to March 2023, when Ebusco signed an agreement with Qbuzz on the delivery of 45 electric 12-metre buses (plus some articulated models). Reportedly, “Together, they agreed that the deadline for delivery would be exactly one year later: 22 March 2024. The parties also agreed that they could deviate from the agreement by mutual consent. When it became clear that the 22 March 2024 delivery date was not feasible for Ebusco, the parties agreed a new latest delivery date of 1 September 2024 in a settlement agreement. Part of the agreement is that Qbuzz may terminate the agreement if Ebusco has not delivered all 45 buses by 1 December 2024 or if Ebusco announces before then that this date is not feasible and Qbuzz finds this new overrun unreasonable”.

According to the Telegraaf, “investors’ club VEB is surprised by the turn of events. In a statement, the interest group for private investors writes: ‘So far, Ebusco has not disclosed anything about the details of the issue. For instance, it is unclear how many shares will be placed with private investors. Therefore, it has also not yet been disclosed whether major shareholders are participating. Moreover, it is still unclear which banks will accompany the issue. That is highly unusual.’”.