Poway, CA-based heavy-duty hybrid-electric drive systems maker ISE Corp. filed for Chapter 11 bankruptcy reorganization yesterday in San Diego—less than six months after the 15-year-old company went public on the Toronto Stock Exchange. The company makes hybrid-electric drive trains and energy storage systems for buses and other heavy-duty vehicles.
In a statement issued yesterday, the company says it was unsuccessful in its recent efforts to raise additional capital. In a July 13 statement, ISE said it was laying off 45 employees, or roughly a third of its workforce, in a bid to conserve capital while it searched for new investors or lenders. In its most recent statement, ISE says, “After a review of the various alternatives available to ISE, the board of directors concluded that utilizing the Chapter 11 process to restructure ISE’s business is in the best long-term interests of ISE and all of its stakeholders.”
What’s less clear is why the company’s available cash was exhausted, or nearly exhausted, just months after ISE raised about $20 million in its Canadian IPO. As we reported, ISE sold 3.45 million shares at C$6 a share (about $5.83 U.S.) in its Feb. 23 IPO. The company said at the time that it planned to use the proceeds to repay a loan, and for research and development, capital equipment purchases, and to expand sales and marketing. ISE was trading at 30 cents a share on the Toronto exchange yesterday. Spokeswomen for the company did not respond to an e-mail query sent earlier today.
The company has sold more than 300 hybrid-electric drive systems, and Winnipeg-based bus manufacturer New Flyer Industries said yesterday that it has begun contingency plans to support to customers that use the company’s hybrid propulsion system or components if ISE cannot provide the support itself.
ISE said it plans to continue operating during its Chapter 11 reorganization, a court-supervised process that enables a company to discharge some debts and emerge with a chance at rebuilding its business and financial stability. In its statement, ISE said it has been in discussions with its lenders and strategic partners to obtain additional financing during the Chapter 11 restructuring process. The company says its “viability and ability to continue as a going concern is dependent on securing additional capital.”
ISE, founded in 1995, has raised at least $49.2 million in venture funding. In 2008, the company said it had raised $17.5 million in a Series D round of venture funding that included Siemens Venture Capital, Macquarie Clean Technology Fund, DTE Energy Ventures, Rockport Capital Partners and NGP Energy Technology Partners. Previous venture rounds included Third Avenue Management, North Arrows, and other investors.
