Arrival (NASDAQ:ARVL) stock is rising on Tuesday thanks to news of a $50 million new equity capital commitment.
This comes from the electric vehicle (EV) company’s sale of equity to Antara Capital Master Fund LP. To go along with that, it’s exchanging $121.9 million principal amount of 3.50% convertible notes due 2026 held by Antara for additional equity.
This has the company massively reducing its debt while also improving its liquidity. The $50 million in equity comes in two parts. The first is $25 million as Arrival issues 125 million shares of ARVL stock to Antara. The remaining $25 million will be invested between May 15, 2023, and June 30, 2023. That won’t see ARVL stock priced below 20 cents per share.
To go along with this, Antara has agreed to hold 100 million newly issued shares of ARVL stock for a 12-month period. Arrival also has the right to repurchase these shares for a price of 40 cents each.
What This Means For ARVL Stock
John Wozniak, CFO of Arrival, provided the following insight into its deal with Antara:
“Today’s agreements are an important step in the fund-raising process to support Arrival’s business plan and are in the best interests of all of our stakeholders. It delivers $50 million of new capital and significantly strengthens our balance sheet by reducing debt by 38 percent.”
ARVL stock is up 3% as of Tuesday morning after seeing greater gains in earlier trading hours today.
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On the date of publication, William White did not have (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.