Hydrogen fuel cell company Loop Energy (TSX: LPEN) is laying off 65 percent of its employees, according to a corporate update.
The company cited “challenging capital market conditions, including significant stock price declines in the hydrogen fuel cell sector since the beginning of the year,” as the reason for the layoffs.
The layoffs include an approximate 65 percent global headcount reduction by the end of the year, and the closing of production in China, the company said. The layoffs will impact roughly 84 of the company’s 134 employees.
Loop will reduce product shipments through to the end of the year and accordingly may not meet prior year revenues.
The decision follows a strategic review in which the company included investigating strategic partnerships, licensing opportunities, joint development and outsourcing opportunities, and other ways to bring new capital, expertise and resources to the business and to identify growth opportunities and ways to support Loop’s expansion plan.
Following the public announcement of the strategic review and at the direction of the board of directors, Loop conducted a comprehensive outreach to over 130 potential counterparties and while discussions are ongoing with certain parties, no offer or proposal is currently under consideration.
Loop estimates the operating cost reduction program will extend its cash runway to the end of the first quarter of 2024. This will allow the continuation of its strategic review process and outreach to potential counterparties and engagement with parties that previously expressed interest.
In addition, as part of the operating cost reduction program, Loop will reduce product shipments through to the end of the year and accordingly may not meet prior year revenues.
In a statement, CEO Ben Nyland told BetaKit that the company will continue to focus its staffing and business development efforts on fuel cell stack design, development, production and testing based on its proprietary technology.
“Business development efforts will include finding potential partners to support the existing install base, and options for modules and systems business,” Nyland said. “By focusing our engineering efforts to stack development, we are looking to accelerate product performance advancements, which will help original equipment manufacturers gain market share.
Nyland noted that one of the goals behind the strategic discussions for the fuel cell module and system business is to localize system assembly, integration and service support closer to the markets where our customers operate. “By doing so, we are aiming to create benefits of reduced delivery time, increased supply chain security, and improved service,” he added.
Related: Loop Energy, Acuva, CORE Energy receive collective $13.4 million in federal cleantech funding
Loop is a designer and manufacturer of hydrogen fuel cell systems primarily targeted for the electrification of commercial vehicles and stationary power systems.
Headquartered in Burnaby, British Columbia, Loop operates globally, with sales and customer support in North America, Europe and Asia-Pacific, and manufacturing in Asia-Pacific.
Ben Nyland became president of Loop in 2015 and CEO in 2016. Under his leadership, Loop Energy had grown its operations internationally, with facilities in China and Europe to serve its growing customer base in Asia and Europe. During his tenure, Nyland oversaw the launch of multiple products while expanding Loop Energy’s team to China, the US and Europe.
Nyland also led the company in securing two rounds of strategic investment and subsequently through the IPO process in 2021, raising $100 million on the Toronto Stock Exchange. The stock as of press time today sat at 19 cents per share.
The federal government invested $9.75 million through its Business Scale-Up and Productivity Program into Loop in May, 2022. The financing was to enable Loop to purchase new equipment and bring a key part of its manufacturing process in-house, eliminating the company’s reliance on international suppliers.
The funds were expected to generate “significant revenues” and 110 new jobs in Burnaby, providing work opportunities for the local workforce and hydrogen-related companies.
Feature image courtesy Loop Energy.