Lucid Motors announced plans to raise $875 million through a private offering of convertible senior notes due 2031, with underwriters receiving an option to purchase an additional $100 million in debt.
The Newark, California-based EV maker said on Tuesday after markets closed that it intends to use a portion of the proceeds to repurchase some of its existing 1.25% convertible notes due in 2026.
On Wednesday, the company led by the interim CEO Marc Winterhoff said the issuance and sale of the notes “are scheduled to settle on or about November 17.”
Lucid added that it also “granted the initial purchasers of the notes an option, for settlement within a period of 13 days from, and including, the date the notes are first issued, to purchase up to an additional $100,000,000 principal amount of notes.”
The move allows the company to not further dilute shareholders and it comes days after its third quarter results where it posted a net loss of $978.4 million.
When reporting the financials results, Lucid said it has increased the delayed draw term loan credit facility (DDTL) from $750 million to “approximately $2 billion” from Saudi Arabia’s sovereign wealth fund, Public Investment Fund.
Lucid said the move from its largest shareholder and main backer increases its total liquidity by $1.3 billion. As of September 30, total liquidity stood at $4.2 billion, excluding the DDTL.
Structure of the New Deal
The EV maker said the six-year notes will be senior, unsecured obligations that accrue interest payable semi-annually in arrears, with a maturity date of November 1, 2031.
The securities can be settled in cash, shares of Class A common stock, or a combination of both, at the company’s discretion.
Lucid retains the option to redeem the notes, in whole or in part, beginning November 6, 2028, provided the company’s common stock trades above 130% of the conversion price for a specified period and certain liquidity conditions are met.
PIF Backing
Concurrently with the offering, Ayar Third Investment Company, the subsidiary of Lucid’s main backer Public Investment Fund (PIF), is expected to enter into a prepaid forward transaction with an affiliate of one of the initial purchasers.
Saudi Arabia’s PIF has a stake of about 60% in the electric vehicle maker. It started by investing $1 billion in Lucid back in 2018.
Under this arrangement, Ayar will purchase shares of Lucid‘s common stock, with delivery anticipated around the notes’ maturity date.
The prepaid forward is designed to facilitate privately negotiated derivative transactions between the forward counterparty and note investors seeking to hedge their positions.
As part of the offering, Lucid said it plans to enter into separately negotiated transactions with holders of its 2026 notes to repurchase a portion of that debt for cash.
In an interview released last month, Lucid’s interim CEO Marc Winterhoff said he was not aware of any plans of PIF to take the company private.
“I don’t know of any ambitions right now to take it private,” the interim CEO told Semafor.
