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MULN Stock Alert: What You Need to Know About Mullen’s Esousa Deal

  • Mullen Automotive (MULN) has added the I-GO to its portfolio of electric vehicles.
  • The company also amended its convertible note agreement with Esousa Holdings.
  • Shares of MULN stock are down more than 90% year to date.
MULN stock - MULN Stock Alert: What You Need to Know About Mullen’s Esousa Deal

Source: Sam the Leigh / Shutterstock.com

Mullen Automotive (NASDAQ:MULN) stock is up more than 30% following the announcement of the I-GO electric vehicle (EV). The vehicle is not proprietary; instead, Mullen has received the rights to distribute and brand the compact EV, which carries a range of 124 miles.

Germany is expected to be the first recipient of the last-mile delivery vehicle in December. The I-GO has also been certified to sell in countries such as the United Kingdom, Germany and Spain. Furthermore, the starting price has been set at $11,999, excluding value-added tax (VAT) and local transportation costs.

Meanwhile, Mullen filed a Form 8-K updating its agreement with significant shareholder Esousa Holdings. Esousa is also the largest eligible selling shareholder as part of Mullen’s plan to resell up to 900 million shares.

Let’s get into the details.

MULN Stock Alert: What You Need to Know About the Esousa Deal

On June 17, Mullen entered into an Amended and Restated Secured Convertible Note and Security Agreement (A&R) with Esousa that amended a previous agreement. The original convertible notes were set to expire on July 23 of this year. The A&R pushed back the expiration date to July 23, 2024. In addition, the A&R also stated that Esousa could convert the notes into common stock at a 5% discount relative to the “lowest daily volume-weighted average price in the 10 trading days prior to conversion.”

On June 30, Esousa elected to exercise notes worth $27.61 million, equivalent to 28 million shares of common stock. This means that the remaining balance on the principal amount would be worth $1.09 million if the order was completed.

However, due to limitations on authorized outstanding shares, Mullen was unable to execute this order. The company issued Esousa only 17.5 million shares, which meant that it “defaulted on its obligations under the Original Note.”

Mullen Inks New Agreement With Esousa

As a result of the default, Esousa entered into a new agreement with Mullen. The new agreement, called the Exchange Agreement, will see Esousa receive convertible promissory notes with a principal amount of $12.94 million. These notes also extended the maturity of the A&R notes to July 23 of 2025 and can be exercised at a 5% discount as well. As part of the agreement, Esousa will “cancel and extinguish and not seek to enforce any rights or interest in the A&R Note.”

Finally, the 8-K also showed that on Oct. 17, Mullen filed to increase its Series D convertible preferred stock from 87,500,001 shares to 437,500,001 shares. These shares are convertible to common stock on a 1:1 basis. Mullen has authorization to issue a total of 2.25 billion 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.

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.


Article printed from InvestorPlace Media, https://investorplace.com/2022/10/muln-stock-alert-what-you-need-to-know-about-mullens-esousa-deal/.

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