German flying taxi company Lilium NV (LILM.US) saw its stock price plummet on Thursday after stating in a document that its two main subsidiaries would file for bankruptcy in the coming days.
Following the news, the German startup's stock price plummeted by more than 60%, slightly narrowing the loss at midday, but then returning to near the opening loss level. The stock closed at a 52-week low, down 61%, at approximately 20 cents per share.
In a document submitted to US regulators, Lilium, listed on the NASDAQ, stated that it failed to raise enough additional funds to maintain operations at its two main subsidiaries, Lilium GmbH and Lilium eAircraft GmbH.
As a result, the heads of these subsidiaries "determined that they are over-indebted... and unable or will be unable to pay existing debts due in the coming days," Lilium said.
The company also added: "The subsidiary management has informed the company that they must file for bankruptcy under German law and will apply for a self-administration procedure in Germany."
Lilium had attempted to persuade the German federal government to provide national support for the company but was unsuccessful. Lilium had sought to raise a loan of €50 million ($54 million) from the treasury, but its request was rejected by lawmakers.
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Overall, Lilium was trying to raise €100 million in convertible loans. The proposed government aid would have been disbursed by the German state-owned development bank KfW.
After being rejected by the federal government, Lilium continued separate negotiations with the state of Bavaria in southeastern Germany. The company sought to raise at least €50 million from the state.
However, Lilium stated on Thursday that it had not yet "reached a principle agreement" with Bavaria.
Lilium said that once bankruptcy is filed, subsidiaries typically do not have to repay any pre-filing debts and added that creditors are generally "not allowed to cancel any claims the company may have."The subsidiary plans to file for bankruptcy, which could lead to Lilium eventually delisting from the Nasdaq Global Select Market or having its stock trading suspended.
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