By Jodi Xu Klein and Becky Yerak
Electric-vehicle company Bird Global filed for bankruptcy on Wednesday, becoming the latest company that went bust from a special-purpose acquisition company, or SPAC, boom that took hundreds of risky companies to the stock market in recent years.
Miami-based Bird, founded in 2017, distributes electric scooters designed for short-term rental in more than 350 cities. In 2019, it was valued at $2.5 billion. Bird went public in 2021 through a SPAC.
Bird said reasons for its bankruptcy filing include "significant litigation expense" related to the more than 100 lawsuits it is facing, mostly personal-injury claims involving scooter riders' accidents. It also said it had made significant investments during the Covid-19 pandemic due to heightened use for its scooters, but that declining demand, coupled with inflation, have squeezed profit margins. It said it also faces increased competition.
An increasing number of companies that merged with SPACs are running out of cash, joining at least a dozen that have already gone bankrupt. Many businesses like Bird were worth billions when they went public at the prospects of space tourism, cryptocurrencies and electric cars. They have since lost hundreds of billions of dollars in market value collectively.
Since its stock-market debut, Bird has been hit hard by rising costs and its shares lost more than 90% of their value in the six months after it went public. The company warned late last year that it could soon file for bankruptcy.
In early January, Bird raised about $30 million in convertible notes and money from top executives by merging with its Canadian partner, Bird Canada. A spokeswoman then said the funding should help Bird build a self-sustaining business.
Electric scooter rentals aren't popular with many citizens. In September, nearly 90% of voters in a Paris referendum supported a ban on such services, dealing a major blow to scooter companies. Paris's city officials called for the vote because they said the scooters clogged sidewalks and contributed to an increasing number of traffic accidents.
Bird filed for chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of Florida, listing assets and liabilities of up to $500 million each. The company has a restructuring agreement with its creditors, including selling assets in bankruptcy, according to a company announcement.
Existing lenders that have agreed to purchase the assets set the floor for the assets sale, where Bird can entertain higher offers. The deal is subject to bankruptcy court approval.
Apollo Global Management and Bird's second-lien lenders have agreed to provide $25 million in financing that would see the company through bankruptcy. Bird will continue to operate as usual as it restructures in court, according to the announcement.
The company's Canadian and European businesses aren't part of the bankruptcy and will continue operating as normal.
A SPAC, also called a blank-check company, is a shell company that raises money from investors, then lists on a stock exchange with the sole intent of acquiring and merging with a private company to take it public. After a deal is announced, it must be approved by regulators. Once it is completed, the company going public replaces the SPAC in the stock market.
Others to file for bankruptcy in recent months include grocery courier Boxed and sensor technology startup Quanergy Systems.
Bird and various affiliates are represented in the bankruptcy by law firm Berger Singerman. Teneo is providing restructuring advice.
The cases have been consolidated under number 23-20514 and assigned to Judge Laurel Isicoff.
Write to Jodi Xu Klein at jodi.klein@wsj.com and Becky Yerak at becky.yerak@wsj.com
(END) Dow Jones Newswires
December 20, 2023 18:29 ET (23:29 GMT)
Copyright (c) 2023 Dow Jones & Company, Inc.
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