Shares of Mullen Automotive (NASDAQ:MULN) stock opened in the green after the company announced in a Form S-3 that it would resell up to 900 million shares owned by selling shareholders. The offering will consist of 23 million shares of common stock, 350 million shares of common stock that are issuable upon conversion of Series D preferred stock and 527 million shares that are issuable upon conversion of outstanding warrants. Mullen stated that it “may” receive proceeds from the exercise of warrants but not from the resale of common stock. The exercise of all the warrants in the offering will have a total value of $148 million, which Mullen will use for its “operational program budget.”
On Oct. 13, the electric vehicle (EV) company filed a Form 8-K to confirm its purchase of Electric Last Mile Solutions (OTCMKT:ELMSQ). Mullen’s initial stalking horse bid of $92 million technically won the auction due to a lack of other bidders. Of the $92 million, $55 million was attributed to acquiring assets, such as a manufacturing plant in Indiana. The remaining $37 million was attributed to contracts and related liabilities.
MULN Stock: Mullen Files to Resell Up to 900 Million Shares
The Series D preferred stock will be convertible into common stock on a 1:1 basis. Meanwhile, the warrants will have an exercise price of the lower of:
(i) $1.27, the closing price of the Company’s stock on the date the Securities Purchase Agreement was executed, or (ii) the closing price of the Common Stock on the trading day immediately preceding the Purchase Date, subject to a floor price of $0.10 per share.
There are seven selling shareholders for the offering. Below is a list of the shareholders, followed by the maximum number of shares allowed to be sold:
- Esousa Holdings: 325,287,281 shares.
- Acuitas Capital: 318,909,099 shares.
- Michael Friedlander: 159,454,534 shares.
- Jess Mogul: 47,836,360 shares.
- Jim Fallon: 15,945,453 shares.
- Davis-Rice Pty: 7,972,727 shares.
- Digital Power Lending: 1,594,546 shares.
Most of the shares above will be issuable and sellable upon the exercise of warrants, which will have dilutive effects. The company noted that:
Our commitments to issue shares of Preferred Stock and Warrants that are convertible into shares of Common Stock may cause significant dilution to our stockholders.
Mullen has received authorization to issue up to a total of 2.25 billion shares of common stock. Of those shares, 1.75 billion consists of common stock, while the remaining 500 million shares consist of preferred stock. As of Oct. 10, the company had 878,001,844 outstanding shares of common stock.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.