Electra Battery Materials Corporation — financial distress indicators
Financial-health summary
Electra Battery Materials Corporation's reported numbers place it in the 'Very weak' financial-health band (distress score 88/100). The main indicators are operating profit does not cover interest, market-implied default probability >20% and losses in each of the last 3 years. Independently, the Ohlson accounting model puts its 1-year failure probability at 97% and the market-implied (Merton) default probability is 62.2%.
Stress by dimension
Share price — last 12 months
Indicators behind the score
Each red flag shows the evidence from the company’s own filings and the financial or legal principle behind it. Points add to the 0–100 score.
Interest coverage (EBIT / interest) is -1.59×.
When EBIT < interest, debt service is funded from cash reserves or new borrowing — the classic precursor to payment default and covenant breach.
Merton distance-to-default -0.31 σ → PD 62%.
Structural (Merton/KMV) model: equity is a call option on assets; low distance-to-default means assets are close to the default point.
Net income negative in 3 of 3 fiscal years.
Persistent losses erode equity and the capacity to absorb shocks.
Operating cash flow negative in 3 of the last 3 years.
A business that cannot fund itself from operations depends on external capital to survive.
Price is -93% from its 52-week high.
Equity markets price distress early; collapses of this size usually reflect fear of wipe-out in a restructuring.
O-score 3.49 → model probability 97%.
Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.
Share count up +568% in a year.
Survival financing: repeated equity raises at depressed prices.
Current ratio is 0.75.
Short-term obligations exceed short-term resources — the company relies on rolling over credit.
Cash covers ~18 months of free-cash-flow burn.
Funding needs within two years make the company dependent on capital-market access.
Last price $0.50.
Below the $1 minimum-bid listing standard (Nasdaq Rule 5550(a)(2) / NYSE 802.01C); sustained breach leads to delisting and loss of capital-market access.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- No material mitigating factors found in the available data.
📰 Recent news scan
- Electra Appoints General Manager to Lead Cobalt Refinery Commissioning and OperationsYahoo Finance · 2026-10-05
- Electra Reports Quarterly Update on Capital Markets ActivityYahoo Finance · 2026-10-02
- Electra Battery Materials Corporation (ELBM) Upgraded to Buy: Here's WhyYahoo Finance · 2026-09-21
- Electra Battery Materials Gets Preliminary Engineering Results for Initial Phase of Proposed Nickel RefineryYahoo Finance · 2026-09-16
- Electra Advances Phased Nickel Refining and Battery Recycling Strategy for North AmericaYahoo Finance · 2026-09-16
- Electra Receives Extension from NASDAQ to Resolve Minimum Price RequirementYahoo Finance · 2026-09-15
⚖️ U.S. legal pathway — Title 11, U.S. Code
Which chapter would apply?
- Chapter 11 — reorganisation. Management usually stays in control as debtor-in-possession; the automatic stay (§362) halts collection; a plan must meet the best-interests test (§1129(a)(7)) and the absolute priority rule (§1129(b)) — creditors are paid before shareholders, who are frequently wiped out.
- Chapter 7 — liquidation. A trustee sells assets and distributes proceeds by statutory priority (§§507, 726).
- Subchapter V (“Chapter 5”) is a fast track for small-business debtors under a statutory debt cap, but SEC-reporting companies are excluded (§101(51D)) — so it rarely applies to listed companies.
What typically triggers a filing
- Payment default or covenant breach lenders will not waive; a debt maturity that cannot be refinanced.
- Auditor going-concern doubt (ASC 205-40 / PCAOB AS 2415) — often itself a default trigger in loan agreements.
- Creditors can force a case with an involuntary petition (§303) if debts are not paid as they come due.
- Delisting after sustained sub-$1 prices or equity deficits cuts off equity funding.
Transactions shortly before filing can be clawed back (preferences — 90 days, §547; fraudulent transfers — 2 years, §548).
Frequently asked questions
What do Electra Battery Materials Corporation's financial-health indicators show?
As of 2026-10-08, Electra Battery Materials Corporation's public financial data places it in the 'Very weak' band with a distress score of 88/100, driven by operating profit does not cover interest, market-implied default probability >20% and losses in each of the last 3 years. This is a statistical screen of reported numbers — it does not mean the company is insolvent, has defaulted or will enter insolvency proceedings.
What is Electra Battery Materials Corporation's financial distress score?
88/100 ('Very weak'). Ohlson O-score 3.49 (model 1-year failure probability 97%). Merton distance-to-default -0.31 σ (model default probability 62.2%).
What works in Electra Battery Materials Corporation's favour?
No material mitigating factors were found in the available data.
How are shareholders treated if a company enters insolvency?
In a Chapter 11 reorganisation the absolute priority rule pays secured lenders, then unsecured creditors, before shareholders — so existing shares are usually cancelled or heavily diluted. In Chapter 7 the company is liquidated and shareholders rarely recover anything.
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Methodology
Score = capped sum of rule-based red flags across seven dimensions (liquidity, solvency, profitability, cash flow, sales trend, market signal, news). Ohlson O-score (1980) gives an accounting-based 1-year failure probability; Merton distance-to-default (Bharath & Shumway 2008) gives a market-implied probability. Financial institutions use a capital-based rule set. Recalculated every trading day from the latest filings, prices and news.