Lucid is looking to raise as much as $3 billion through a new stock offering as it looks to raise more money to grow its cash reserves and increase production.
The electric car manufacturer will raise the money in two ways. The first will see it issue 173 million shares of new common stock on the Nasdaq, equivalent to approximately $1.2 billion. Additionally, Lucid has entered into an agreement with Saudi Arabia’s Public Investment Fund for it to purchase an additional 265 million shares of common stock in a private placement worth $1.8 billion.
The private place is expected to close on June 26, 2023 and will see the Public Investment Fund maintain its approximate 60.5% majority ownership of Lucid’s outstanding common stock. Lucid says it will use the net proceeds from the public and private offerings “for general corporate purposes, which may include, among other things, capital expenditures and working capital.”
“The secondary offering will probably be okay as there’s a lot of ESG dollars looking for investments,” chief investment officer at money management firm Navellier, Louis Navellier told Reuters. “That, along with money from the Saudis, will ensure Lucid survives a couple of more years. But their burn rate needs to fall fast. There’s a glut of EVs for sale in the U.S. and competitors are cutting prices and offering discounts.”
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Saudi Arabia’s current stake in Lucid is worth nearly $9 billion but the brand’s cash and cash equivalents had fallen to $900 million at the end of the first quarter, down from the $1.74 billion in the previous quarter. Lucid’s chief financial officer says the firm has about $4.1 billion in liquidity which is enough to fund it until at least the second quarter of next year.
While Lucid is behind its production targets in the United States, it is building a new production facility in Saudi Arabia and has agreed to build up to 100,000 vehicles for the Saudi government over the next decade.
