The EV startup Canoo — which recently signed a deal with Walmart to purchase 4,500 electric delivery vehicles — said on Thursday that entered a pre-paid advance agreement with YA II under which the company may request advances up to $50 million.
YA II PN, Ltd. is an affiliate of Yorkville Advisors Global and was recently involved in a Standby Equity Purchase Agreement (SEPA) with the Icelandic biotech company Alvotech.
“We are offering $50,000,000 of our common stock, par value $0.0001 per share, by this prospectus supplement and the accompanying prospectus, directly to YA II PN, Ltd., a Cayman Islands exempt limited partnership, an affiliate of Yorkville Advisors Global, LP, in connection with the Pre-Paid Advance Agreement that we entered into with YA on July 20, 2022,” Canoo said.
“In accordance with the terms of the PPA, Canoo Inc. may request advances of up to $50,000,000 from YA (or such greater amount that the parties may mutually agree), with a limitation on outstanding Pre-Paid Advances of $50,000,000 and an aggregate limitation on the Pre-Paid Advances of $300,000,000, and such Pre-Paid Advances will be offset upon the issuance of our Common Stock to YA at a price per share equal to the lower of (a) 120% of the daily volume weighted average price of our Common Stock on The Nasdaq Global Select Market as of the trading day immediately prior to the date of the Pre-Paid Advance, or (b) 95% of the VWAP of our Common Stock on Nasdaq as of the trading day immediately preceding the date on which YA provides the purchase notice to us (the “Variable Price” and the lower of the Fixed Price and the Variable Price shall be referred to as the “Purchase Price”); however, in no event shall the Purchase Price be less than $1.00 per share”.
“This prospectus supplement relates to the offering of Common Stock in connection with a $50,000,000 Pre-Paid Advance requested by Canoo under the PPA on July 21, 2022. Interest shall accrue on the outstanding balance of any Pre-Paid Advance at a rate equal to an annual rate of 5%, subject to an increase to 15% upon events of default described in the PPA. The PPA is the second equity investment made by YA, which is also party to the Standby Equity Purchase Agreement, an agreement entered into with the Company on May 10, 2022 (the “SEPA”). Canoo has agreed with YA that it will not utilize the SEPA while there are Pre-Paid Advances outstanding under the PPA, unless the Common Stock is trading below the Floor Price”.
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Last week, RF Lafferty analyst Jaime Perez adjusted the firm’s price target on Canoo stock to $17 while reiterating a Buy rating on the shares. The analyst explained that the cut from $20 to $17 “reflects the increase in share count” and estimated the company’s revenue to be $700 million in 2023.
Last week, Canoo said that has been selected by U.S. Army to supply an electric vehicle for analysis and demonstration supporting the U.S. military’s focus to “incorporate scalable and adaptable capabilities in operational and garrison environments”.
The announcement follows the previous selection by NASA for crew transportation vehicles to deliver astronauts to the Artemis launch site for lunar missions to establish the first long-term presence on the Moon.
Recently, the company signed a deal with Walmart to purchase 4,500 all-electric delivery vehicles, beginning with the Lifestyle Delivery Vehicle (LDV), with the option to purchase up to 10,000 units. The EV maker also confirmed the anticipation of starting production of the Lifestyle Delivery Vehicles beginning in Q4, 2022.
The LDV is expected to begin hitting the road as soon as next year and the companies plan to “kick-off advanced deliveries to refine and finalize vehicle configuration in the Dallas Fort Worth metroplex in the coming weeks,” the EV maker said.
Recently, the electric vehicle start-up filed for up to 48,043,111 shares offering by selling stockholders expecting to receive up to $250 million in aggregate gross proceeds.
On May 10, Canoo reported its Q1 2022 financial results announcing $600 million in accessible capital to optimize the company’s financial needs to start production. A total of $300 million in total funding via a committed PIPE from an existing shareholder and an equity purchase agreement with financing partner Yorkville Advisors and a $300 million universal shelf. At the time, the company disclosed having more than 17,500 preorders with a projected value of $750 million and a growing pipeline.