Dive Brief:
- Luminar Technologies, a maker of sensors and advanced technology for autonomous vehicles, filed for Chapter 11 bankruptcy on Monday and has begun to split the company after losing a major contract with Volvo.
- The Orlando, Florida-based company entered Chapter 11 proceedings with majority support from its first lien and second lien noteholders to facilitate a “value-maximizing sale process” for its core LiDAR business and for the equity of subsidiary Luminar Semiconductors, Inc.
- Prior to initiating its cases, Luminar agreed to sell its chips business to Quantum Computing for $110 million in cash. The transaction is subject to court-supervised approval. Luminar said it will work closely with its suppliers and partners to “minimize disruptions and maintain delivery” of its LiDAR products during the proceedings.
Dive Insight:
The decisions to enter bankruptcy and split the company come after Luminar lost Volvo as a LiDAR customer last month.
Volvo updated customers Nov. 11 that it will no longer use the sensor technology in its EX90 and ES90 cars starting this year. The companies originally made the deal in March 2020. Additionally, the automaker deferred a decision about whether to include the technology in its next generation vehicles from 2027 to 2029, Luminar disclosed in a recent quarterly report.
As a result, Luminar made a claim against Volvo for “significant damages” and suspended further commitments with the automaker pending resolution. Volvo sent Luminar a letter on Nov. 14 terminating the agreement. The sensor maker warned investors that the dispute may not be resolved or result in recovered damages.
The loss of Volvo has exacerbated Luminar’s financial issues amid slow adoption of its LiDAR technology. The sensor maker generated revenue of $18.7 million in the third quarter and reported a net loss of $89.5 million. Two undisclosed customers accounted for 33% and 18% of Luminar’s revenue for the period. The company’s debt load was $429 million as of Sept. 30.
In an effort to rightsize, Luminar used $25 million of cash on hand to fund the Chapter 11 cases and support operations throughout the chip business sale process. These actions are the best opportunity for Luminar to “maximize value” for its shareholders, CEO Paul Ricci said in a statement.
“Over the past six months, we have taken meaningful steps to drive operational discipline, streamline our cost structure, and sharpen our strategic direction, but our legacy debt obligations and the pace of industry adoption have challenged our ability to operate the business in a sustainable way,” Ricci said.
Luminar filed court documents in the U.S. Bankruptcy Court of the Southern District of Texas. Its chip business is not a debtor in these cases and the company plans to uphold existing commitments with customers as usual through the proceedings and post acquisition. Luminar said it expects to receive approval for its chips business sale by the end of January 2026.
Expected acquirer Quantum Computing is an integrated photonics and quantum optics technology company with a focus on artificial intelligence, cybersecurity and sensing applications. The addition of Luminar’s chips business would accelerate Quantum Computing’s product roadmap and yield a “powerful combination,” CEO Yuping Huang said in a statement.
“There is clear strategic alignment and shared vision between our organizations, creating strong momentum from day one,” Huang said.
