Gaussin in financial trouble

Difficulties that Gaussin has been facing for months now were revealed in late January 2024 when the company, which is listed on the stock exchange, advised of a “substantial difference” between its sales forecasts and actual results for 2023.

“The forecasts drawn up at the beginning of 2023 were based on a robust order book with leading customers, on the ramp-up of its industrial facilities at Saint-Vallier for the assembly of its logistics vehicles, and on a forecast of sustained activity in the underground sector; for these reasons, Gaussin Group thought it would be able to record sales in excess of €100 million for the 2023 financial year.

“At this stage of the closing process, it now appears that sales are unlikely to exceed €40 million for the 2023 financial year,” Gaussin said.

Gaussin experienced “major difficulties” meeting the production schedule for an order of its ATM Full Elec terminal tractors for a US customer. This the order for 329 ATMs from Amazon previously reported.

Gaussin claims its problems stem from internal management conflicts. The company said it was expecting to face “a number of development and quality challenges on the first batch of vehicles”, but these problems were exacerbated by the “disorganization of the company following the appointment of a new Chief Operating Officer”.

In 2023 the Czechoslovak Group (CSG) took an equity stake in Gaussin, in part to fund the start of production in the US by Gaussin North America. CSG brought in new Board members, a new COO and appointed Dmytro Khoruzhyi as deputy Chief Executive Officer alongside Christophe Gaussin, but the relationship between Gaussin and CSG quickly soured.

Gaussin has accused the COO of making a series of “irrational and contradictory decisions” that resulted in internal conflict and deliveries being suspended. In December 2023 it was announced Dmytro Khoruzhyi would be departing immediately “due to differences of opinion on issues concerning the Group’s operational and financial management.”

As a result of its problems Gaussin has been unable to meet delivery schedules for Amazon and other US customers. “At December 31, the company had only been able to deliver 14 ATM FULL Elec vehicles to its North American customers. A further 26 vehicles were about to be delivered on December 31 and have since been delivered, but have not been included in the 2023 sales figure. In spite of these difficulties, dialogue is being maintained with North American customers to plan further deliveries,” Gaussin advised in January.

To compound these difficulties, Gaussin says its working capital requirements have been adversely affected by the performance of its subsidiary Metalliance, and again points the finger at management issues. “The situation at Metalliance, a 98%-owned subsidiary of the Group, which has placed itself under safeguard proceedings following the contentious unilateral decision of its Managing Director, without any consultation, has only exacerbated the difficulties. Industrially, the assembly and delivery of logistics vehicles from the Saint-Vallier site have been disrupted. In financial terms, despite a recapitalization of 10 million euros in 2023, the opening of these proceedings has resulted in a receivable of 16 million euros owed by Metalliance to the Group,” Gaussin said on 3 April 2024.

Gaussin now faces a difficult path. In late February it was announced Steve Filipov, who was President of Terex Cranes (2016-2019) and CEO of Manitex International (2019-2023) was being brought in as the new deputy CEO to “control the company’s expenses and rapidly put in place the financing required for the Group’s activities.” However, Gaussin now says Filipov’s appointment has been “terminated” by its Board as a result of the company being unable to find new investors with a “sustainable financing solution”.

The Vesoul Commercial Court has opened a 6-month renewable observation period and appointed Selarl BCM, represented by Charles-Henri Carboni, as court-appointed judicial administrator for GAUSSIN SA, and Flavien Marchal as court-appointed creditor’s representative.

“During this period, Christophe Gaussin and Charles-Henri Carboni will work on a continuity plan and a debt repayment schedule. They will continue with the restructuring measures already initiated and will work to mobilize new industrial and financial partners to ensure a sustainable relaunch of the business” Gaussin said.

Gaussin stressed that there is no cessation of payments, and the company’s cash position as of 21 March enables it to continue as a going concern over the next 6 months.

How the situation will impact Gaussin’s deal with Amazon is not known. At the time the contract was announced Gaussin said it could build 2,400 units a year in France, but this has turned out to be hugely unrealistic. All that is known about the delivery schedule for Amazon is that machines were to begin arriving in 2023, and the contract is “cancellable without penalty for a specified period in advance of each tractor’s scheduled delivery date.”

As part of the deal Amazon received warrants for up to 20% of Gaussin’s shares, with an exercise price for the initial 15% of warrant coverage set at €4.04. At the time of writing Gaussin’s share price had crashed to €0.26.