Monday, 11 December 2023

Lucid to raise $ 3 billion from PIF and others


Lucid Group said it intends to raise about $3 billion through stock offerings, with expectations that nearly two-thirds of the amount will come from the Public Investment Fund, prompting shares of the luxury electric car maker to drop 9 percent in after-market trading.

According to Reuters, Lucid said that the Public Investment Fund, which owns more than 60 percent of the company, agreed to buy 265.7 million shares in a private placement for about $1.8 billion, implying a Lucid share price of about $6.80, compared to With Wednesday’s closing price of $7.76.

The rest of the amount will be raised from a public offering of 173.5 million ordinary shares

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The additional funds are important and come at a time when the automaker, like others, is groaning under the weight of mounting losses and shrinking cash reserves amid recession fears and the price war sparked by Tesla, the market specialist.

“The secondary offering is probably going to be okay because there are a lot of ESG dollars looking for,” said Louis Navlier, chief investment officer at fund management firm Navlier, which entered the electric vehicle business and related investments but moved away from Lucid. Investments.”

“This, along with the money from the Saudis, will ensure Lucid will survive for a few more years,” he added. But the rate of exhaustion in them should decrease rapidly. There is an abundance of electric cars for sale in the United States, and competitors are lowering prices and offering discounts

Lucid cash and cash equivalents decreased to $900 million at the end of the first quarter of the year, compared to $1.74 billion in the previous quarter.

CFO Sherry House said that the company has liquidity of about $4.1 billion, which is enough to finance the luxury electric car company in the second quarter of next year at least.

The luxury sedan maker lowered its 2023 production forecast this month and reported lower-than-expected first-quarter revenue, which CEO Peter Rawlinson attributed to rising interest rates as a challenge to the market.

Despite Lucid’s suffering, the Public Investment Fund has been a loyal investor in the automaker, with its stake currently standing at about $9 billion.

The California-based company is building its first overseas production plant in the kingdom, and the Saudi government has agreed to buy up to 100,000 Lucid cars over the next ten years.

On Wednesday, the company, which is set to unveil its Gravity SUV later this year ahead of its 2024 launch, said it plans to use the net proceeds from its offerings for general corporate purposes, including capital expenditures and working capital.

Bank of America will act as bookrunner for the public offering and Lucid intends to use the net proceeds from both the public offering and private placement for general corporate purposes.