Carbon Revolution Receives $5 Million from OIC, $0.4 Million Reserve Release from Lenders

Carbon Revolution has secured the final release of $5 million from Orion Infrastructure Capital and the final $0.4 million reserve release from existing lenders. The company will issue penny warrants to purchase shares equal to 5% of its outstanding shares. However, due to declining revenue forecasts and delayed customer payments, Carbon Revolution expects to require additional funding within the next quarter and is in discussions with OIC for potential additional funding.

Carbon Revolution (NASDAQ: CREV), a leading manufacturer of carbon fiber wheels, has secured the final $5 million release from Orion Infrastructure Capital (OIC), completing the full disbursement of their $25 million facility announced in December 2024. Additionally, existing noteholders from the $60 million PIUS loan have released the final $400,000 in reserves. The company will issue penny warrants to OIC and existing noteholders representing 5% of outstanding shares. However, Carbon Revolution has revised revenue forecasts downward due to declining wheel orders and expects to need additional funding within the next quarter due to revenue forecast reductions and delayed customer payments.

The release of the final $5 million from OIC completes their $25 million facility, while existing lenders released the remaining $400,000 in reserves. In exchange, the company issued penny warrants representing 5% of outstanding shares to these creditors. Both lender groups have also agreed to accept partial non-cash interest payments for approximately six months—a concerning sign of cash conservation.

The most significant red flag is Carbon Revolution's explicit statement that despite completing this $27 million funding round, they now expect to need additional capital within the next quarter. This immediate timeline suggests severe cash flow challenges, especially concerning given they've simultaneously revised revenue forecasts downward due to declining customer orders and delayed customer payments. The company's decision to slow expansion plans signals management's acknowledgment of these financial constraints.

While they mention discussions with OIC for potential additional funding and exploration of other financing options, they provide the critical caveat that there's no assurance of securing funding on satisfactory terms, if at all. This press release effectively communicates that despite completing their previously announced funding round, Carbon Revolution's financial position has deteriorated from their earlier projections, necessitating immediate additional capital and potentially placing them in a vulnerable negotiating position with potential funding sources.

References:
[1] https://www.stocktitan.net/news/CREV/carbon-revolution-secures-final-release-of-5-million-from-oic-and-3ty33tfvt1n8.html