Item 1. Security and Company
This
Schedule 13D (as may be amended and supplemented from time to time,
the “Schedule 13D”) relates to the common shares (the
“Common Shares”) of The Lion Electric Company, a corporation
governed by the laws of Québec (the “Company”). The
principal executive offices of the Company are located at 921
chemin de la Rivière-du-Nord, Saint-Jerome, Quebec, J7Y 5G2,
Canada.
Item 2.
Identity and Background
|
(a)
|
This statement is being filed by the following persons (the
“Reporting Persons”):
|
|
(i)
|
Power Sustainable Capital Inc., a corporation governed by the laws
of Canada (“Power Sustainable”)
|
|
(ii)
|
Power Energy Corporation, a corporation governed by the laws of
Canada (“Power Energy”).
|
|
(b)
|
The address of each of the Reporting Persons is 751 Square
Victoria, Montreal, Quebec, H2Y 2J3, Canada.
|
|
(c)
|
Set forth in Annex A attached hereto and incorporated herein
by reference is a list of the persons required to be identified in
respect of the Reporting Persons pursuant to General Instruction C
to Schedule 13D (collectively, the “Covered Persons”), and
the business address and, in the case of Covered Persons who are
not Reporting Persons, the present principal occupation, of each of
the Covered Persons. The principal business of the Reporting
Persons is making securities and other investments.
|
|
(d)
|
During the last five years, none of the Reporting Persons and, to
the best of the Reporting Persons’ knowledge, none of the Covered
Persons, has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors).
|
|
(e)
|
During the last five years, none of the Reporting Persons and, to
the best of the Reporting Persons’ knowledge, none of the Covered
Persons, was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
|
|
(f)
|
Information regarding the citizenship of each of the Covered
Persons is set forth in Annex A.
|
Item 3.
Source and Amount of Funds or Other Consideration
On
December 16, 2022, Power Energy purchased 9,842,519 units
(“Units”) in an offering (the “Offer”) by the Company
at a purchase price of $2.54 per unit, with each Unit consisting of
one Common Share and one common share purchase warrant (each a
“Warrant”). Each Warrant entitles the holder thereof
to purchase one Common Share at an exercise price of $2.80 per
share, exercisable for a period of five years following the closing
of the Offer. All of the foregoing Units were acquired with funds
advanced by Power Sustainable, Power Energy’s sole owner.
On
May 6, 2021, the Company completed the transactions contemplated by
that certain Business Combination Agreement, dated as of November
30, 2020, entered into between Lion Electric Merger Sub Inc. and
Northern Genesis Acquisition Corp. (the “Business
Combination”). Immediately prior to the completion of the
Business Combination, the Company completed a reorganization (the
“Pre-Closing Reorganization”) which included a share split,
pursuant to which each Common Share outstanding immediately prior
to such share split was converted into 4.1289 Common Shares.
Prior to
the Pre-Closing Reorganization, Power Energy owned
13,743,819 Common Shares, which were acquired by Power Energy
in October 2017, pursuant to a subscription agreement, by and
among, the Company and Power Energy and a share purchase agreement,
by and among the Company, Power Energy and certain other parties
thereto. Following the Pre-Closing Reorganization, but prior to the
Business Combination or PIPE Transaction (defined below), Power
Energy owned 69,959,334 Common Shares, representing (i)
56,746,854 Common Shares, as
a result of the stock split in Pre-Closing Reorganization and (ii)
13,212,480 Common Shares that could be acquired by Power Energy
through the Option Agreement (as defined below). On May 6,
2021, Power Energy purchased 1,662,500 Common Shares from the
Company, at a price of $10.00 per share, in a private placement
that closed immediately prior to the closing of the Business
Combination, pursuant to a subscription agreement previously
entered into by and between Power Energy and the Company on
November 30, 2020 (the “PIPE Transaction”). Following the
Pre-Closing Reorganization, Business Combination, PIPE Transaction,
and the exercise of the first and second call options under the
Option Agreement, but prior to the Offer, Power Energy beneficially
owned 69,572,061 Common Shares, representing (i) 67,301,166 Common
Shares held and (ii) 2,270,895 Common Shares that could be acquired
by Power Energy through the Option Agreement. All of the foregoing
Common Shares were acquired with funds advanced by Power
Sustainable.
The
information set forth in Item 5(c) regarding Pierre-Olivier Perras
is incorporated herein by reference.
Item 4.
Purpose of Transaction.
The
information set forth in Items 3 and 6 of this Schedule 13D is
incorporated by reference in its entirety into this Item 4.
General
The Reporting Persons beneficially own the Common
Shares and Warrants for investment purposes. The Reporting Persons
continuously assess the Company’s business, financial condition,
results of operations and prospects, general economic conditions,
other developments and additional investment opportunities.
Depending on such assessments, and subject to any restrictions
described herein, the Reporting Persons may acquire additional
securities of the Company or new securities of the Company or may
determine to purchase, sell or otherwise dispose of all or some of
the Company’s securities beneficially owned by the Reporting
Persons in the open market, as applicable, in privately negotiated
transactions, in transactions directly with the Company or
otherwise. Such actions will depend upon a variety of factors,
including, without limitation, current and anticipated future
trading prices, the financial condition, results of operations and
prospects of the Company, alternative investment opportunities,
general economic, financial market and industry conditions and
other factors that the Reporting Persons may deem material to their
investment decision.
Lock-Up
Letter
On
December 12, 2022, Power Energy entered into a lock-up letter with
B. Riley Securities, and National Bank Financial, Inc.
(collectively, the “Underwriters”) with respect to the
Common Shares owned by Power Energy following the Offer (the
“Lock-Up Agreement”). Pursuant to the Lock-Up Agreement,
Power Energy agreed, subject to certain customary exceptions, not
to (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any Common Shares
owned by Power Energy or any securities convertible into or
exercisable or exchangeable for Common Shares, or (ii) enter into
any swap or other arrangement that transfers to another, in whole
or in part, any of the economic consequences of ownership of the
Common Shares, in each case until the date that is 90 days
after December 12, 2022.
Nomination
Rights Agreement
On May 6,
2021, in connection with the closing of the Business Combination,
Power Energy entered into a Nomination Rights Agreement with the
Company and 9368-2672 Québec Inc. (“9368-2672”), pursuant to
which each of Power Energy and 9368-2672 were granted certain
rights to nominate members of the Company’s board of directors (the
“Board”) for so long as it holds a requisite percentage of
the total voting power of the Company. Under the terms of the
Nomination Rights Agreement, each of Power Energy and 9368-2672
will, for so long as it and its affiliates collectively hold at
least 20% of the outstanding Common Shares on a non-diluted basis,
be entitled to designate a number of director nominees equal to the
product of (rounding to the nearest whole number) (i) the
percentage of the outstanding Common Shares held by it (on a
non-diluted basis) multiplied by (ii) the size of the Board.
The Nomination
Rights Agreement further provides that for so long as Power Energy
has the right to designate a director nominee, it shall have the
right to designate one of its director nominees as the Chairman of
the Board. In the event that such designated director nominee is
not an independent director, the remaining directors will select a
lead independent director from amongst the independent directors of
the Board. Each of Power Energy and 9368-2672 also has the right
under the Nomination Rights Agreement to appoint one member of each
committee of the Board, except as otherwise set forth
therein.
The foregoing
description of the Nomination Rights Agreement does not purport to
be complete and is subject to, and qualified in its entirety by,
refence to the Nomination Rights Agreement, included as Exhibit
10.14 of the Company’s Form F-1 filed on May 28, 2021.
Pursuant to
the Nomination Rights Agreement, Power Energy nominated Pierre
Larochelle and Pierre-Olivier Perras (a director of Power Energy)
to the Board, designating Mr. Larochelle as Chairman of the
Board.
Registration
Rights Agreement
On May 6,
2021, in connection with the closing of the Business Combination,
the Company entered into a Registration Rights Agreement (the
“Registration Rights Agreement”) with Power Energy,
9368-2672, and Amazon.com NV Investment Holdings LLC (each such
party, a “Holder” and collectively, the “Holders”),
relating to the registration or
qualification by prospectus in the United States and/or
Canada of Common Shares held
by the Holders.
Pursuant to
the Registration Rights Agreement, each Holder will, for so long as
it and its affiliates collectively hold at least 10% of the
outstanding Common Shares on a non-diluted basis and provided such
Common Shares are “Registrable Securities” as contemplated by the
Registration Rights Agreement, will have a demand right for the
Company to conduct an underwritten public offering of Common Shares
under the U.S. Securities Act of 1933 and/or applicable Canadian
securities laws. Each Holder is entitled to certain incidental
registration rights in connection with demand registrations
initiated by another Holder, as well as to certain “piggy-back”
registration rights in the event that the Company proposes to
register securities as part of a public offering.
The foregoing
description of the Registration Rights Agreement does not purport
to be complete and is subject to, and qualified in its entirety by,
reference to the Registration Rights Agreement, included as Exhibit
4.3 of the Company’s Form F-1 filed on May 28, 2021.
Item 5. Interest in Securities of
the Company.
The
information contained in rows 7, 8, 9, 10, 11 and 13 on the cover
pages of this Amendment and the information set forth or
incorporated in Items 2 and 4 is incorporated by reference in its
entirety into this Item 5.
(a) and (b)
Each of
the Reporting Persons may be deemed to beneficially own and share
the power to vote and dispose of 89,257,099 Common Shares, which
represents 39.2% of the Common Shares outstanding, consisting of
(i) 77,143,685 Common Shares, (ii) 2,270,895 Common Shares
which may be acquired by Power Energy through the exercise of its
options under that certain option agreement, dated November 27,
2020, by and among Power Energy, on the one hand, and XPND
Croissance Fund L.P. (“XPND”), 9368-2722 Québec Inc.
(“9368-2722”) and 9231-9979 Québec Inc.
(“9231-9979”), on the other hand, and (iii) 9,842,519 Common
Shares issuable to Power Energy, to the extent Power Energy elects
to exercise 9,842,519 warrants to purchase Common Shares held at an
exercise price of $2.80 per share. All percentages of Common Stock
outstanding contained herein are based on 227,922,481 Common Shares
outstanding, consisting of (i) 218,079,962 Common Shares
outstanding following the Closing, as disclosed in the Company’s
prospectus supplement filed on December 13, 2022, and (ii)
9,842,519 Common Shares issuable upon the exercise of Warrants held
by the Reporting Persons. Power Sustainable, as the sole owner of
Power Energy, may be deemed to be the beneficial owner of the
Common Shares held by Power Energy.
As a result of direct and indirect securities holdings, Power
Corporation of Canada (“PCC”) and the Desmarais Family
Residuary Trust (the “Trust”), which was created on October
8, 2013 under the Last Will and Testament of Paul G. Desmarais, the
trustees of which are Paul Desmarais Jr., André Desmarais, Sophie
Desmarais, Michel Plessis-Bélair and Guy Fortin, may be deemed to
control the Reporting Persons. Decisions with respect to
voting the shares of PCC held directly and indirectly by the Trust
are determined by a majority of the trustees, excluding Sophie
Desmarais. PCC, a corporation organized under the laws of
Canada, is an international management and holding company with its
principal place of business at 751 Victoria Square, Montreal,
Québec, H2Y 2J3, Canada. The Trust was formed under the laws
of Québec and has its address at 759 Square Victoria, Montreal,
Québec, H2Y 2J7, Canada.
Mr. Perras is a beneficial owner of
7,874 Common Shares, consisting of 3,937 Common Shares and warrants
exercisable for 3,937 Common Shares.
(c) Other
than as disclosed in Item 3, the Reporting Persons have not engaged
in any transaction during the past 60 days involving Common shares.
On December 16, 2022, Mr. Perras acquired 3,937 Units in the
Offer at a purchase
price of $2.54 per Unit, with each Unit consisting of one Common
Share and one Warrant.
(d) No
person other than Power Energy is known by the Reporting Persons to
have the right to receive or the power to direct the receipt of
dividends from, or the proceeds from the sale of, the Common Stock
beneficially owned by the Reporting Persons and described in this
Item 5.
(e) Not
applicable.
Item 6.
Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Company
The information provided or incorporated by
reference in Item 4 is hereby incorporated by reference in
its entirety into this Item 6.
In connection
with the Offer, the Company issued to
Power Energy the Warrants, the form of which is attached as Exhibit
99.2 hereto and is incorporated herein by reference.
On
November 27, 2020, Power Energy, on the one hand, and XPND,
9368-2722 and 9231-9979, on the other hand (collectively, the
“Option Securityholders”) entered into an option agreement
(the “Option Agreement”) pursuant to which each Option
Securityholder has granted an option to Power Energy to acquire
Common Shares held by such Option Securityholder. Under the Option
Agreement, Power Energy has the right, subject to the terms and
conditions set out therein, to purchase from the Option
Securityholders, on a pro rata basis (i) up to 2,100,000 Common
Shares at a price per share of $12.44 (or, following the completion
of the Pre-Closing Reorganization, up to 8,670,690 Common
Shares at a price per share of $3.01) at any time on or before
March 15, 2022, (ii) up to 550,000 Common Shares at a price per
share of $26.09 (or, following the completion of the
Pre-Closing Reorganization, up to 2,270,895 Common Shares at a
price per share of $6.32) at any time on or before April 30, 2022,
and (iii) up to 550,000 Common Shares at a price per share of
$65.22 (or, following the completion of the
Pre-Closing Reorganization, up to 2,270,895 Common Shares at a
price per share of $15.80) at any time on or before October 31,
2023. Under the Option Agreement, Power Energy may elect to
exercise any of the foregoing options on a cashless basis, whereby
the number of Common Shares to be so acquired will be determined on
the basis of the market price of the Common Shares as of
immediately prior to such exercise. Power Energy has exercised its
rights under the Option Agreement to acquire 8,891,812 Common
Shares.
Pursuant to the Company’s Omnibus Plan, the Company awards Deferred
Share Units (each, a “DSU”) to outside members of the Board
(“Outside Directors”), including Mr. Perras. On December 23, 2022,
the Company awarded 16,070 DSUs to Mr. Perras, bringing his total
holdings of DSUs to 24,266. As disclosed in the Company’s Annual
Report Pursuant to Section 13 of the Securities Exchange Act of
1934, filed by the Company on March 29, 2022 with respect to the
fiscal year ended December 31, 2021, all DSUs granted to Company
directors under the Omnibus Plan vest entirely on the date of grant
and take the form of a bookkeeping entry credited to the eligible
director’s account,
to be paid after the director ceases to act as a Company director.
In the event any dividend were to be paid on the Common Shares,
outstanding DSUs would earn dividend equivalents in the form of
additional DSUs at the same rate as dividends would be paid on the
Common Shares. DSUs will be settled in cash and/or in Common Shares
of the Company purchased on the open market or issued from the
Company’s treasury, at the discretion of the Board. Each Outside
Director can elect to receive up to 100% of his or her annual cash
retainer in the form of DSUs. The cash and equity retainers are
payable bi-annually with the number of DSUs to be issued determined
based on the volume-weighted average trading price on the Toronto
Stock Exchange for the five trading days prior to each such
issuance.
The Reporting Persons are parties
to an agreement with respect to the joint filing of this Schedule
13D and any amendments thereto, pursuant to which they have agreed
to file this Schedule 13D jointly in accordance with the provisions
of Rule 13d-1(k)(1) under the Securities Exchange Act of 1934, as
amended. A copy of such agreement is attached hereto as Exhibit
99.1 and is incorporated herein by reference.
Item 7. Materials to be Filed as Exhibits
|
Exhibit
Number
|
Description
|
|
|
|
|
99.2
|
Form of
Warrant
|
|
|
|
|
|
|
|
|
|
|
99.7
|
Option
Agreement
|
|
|
|