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Why Tortoise Acquisition Stock Is Rising Today

By John Rosevear – Aug 17, 2020 at 12:05PM

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A new filing shows that its planned merger with Nikola rival Hyliion is on track.

What happened

Shares of Tortoise Acquisition (SHLL) were moving higher on Monday. The special purpose acquisition company released second-quarter financial information for electric-truck powertrain maker Hyliion, the company it plans to merge with later this year, in a regulatory filing after the market closed on Friday.

As of 11:30 a.m. EDT, Tortoise's shares were up about 10.1% from Friday's closing price.

So what

In a filing with the Securities and Exchange Commission (SEC) on Friday afternoon, Tortoise released key numbers from Hyliion's first-half financial results, which we can use (together with an earlier filing that included first-quarter financial information) to understand how Hyliion performed in the second quarter. 

A Freightliner semi with Hyliion's hybrid drivetrain, painted in green and white with Hyliion's logo

Hyliion has begun shipping its first product, a hybrid-drive system for heavy trucks. Image source: Hyliion.

Hyliion had no significant revenue in the first half of 2020, as it hadn't yet shipped products. (The company has since installed about 20 of its hybrid heavy-truck powertrains in trucks belonging to its initial customers, Tortoise disclosed in Friday's filing.) Here's how the other key numbers compare with Hyliion's first-quarter results. 

Metric Q2 2020 Q1 2020
Operating loss $3.428 million $3.362 million
Interest expense $1.663 million $1.565 million
Net loss $5.562 million $4.885 million
Net loss per share $0.17 $0.23
Cash at quarter-end $3.301 million $6.026 million

Data source: Tortoise Acquisition Corp. Hyliion had $6.285 million in cash as of Dec. 31, 2019.

The filings in question were preliminary versions of the proxy statement for the merger. That's the document that will be sent to existing shareholders of Tortoise, asking them to approve the plan to merge with Hyliion and the members of the merged company's board of directors. 

What's it mean? Not much, although we can see that Hyliion burned about $2.7 million in the second quarter. (The merged company will have an additional $560 million in cash, so no need to worry about that burn rate.) 

But it's another proof point for auto investors: Hyliion is a real company with a real product -- one that has now begun to ship. 

Now what

We still don't know exactly when Tortoise's shareholders will vote on the merger proposal, though it seems likely to happen next month. Tortoise CEO Vince Cubbage told me in June that the parties expected to seal the deal by the end of September, and the proxy statement notes that Hyliion has the right to take on additional debt without Tortoise's consent if the deal doesn't close by Sept. 16. 

As of right now, there aren't any known obstacles to the deal. I expect it will happen roughly on schedule -- that is to say, by about Sept. 15. I also expect that investor interest in the stock will rise once the combined companies begin trading as "Hyliion" following the merger.

John Rosevear has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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