Shares of Lucid Motors (NASDAQ:LCID) are down by about 14% today. The electric vehicle ( ) company announced a public common stock offering of 173.54 million shares. Lucid will receive approximately $1.2 billion in gross proceeds. The public offering is expected to close on or about June 5. Bank of America Securities will act as the sole book-running manager for the offering.
Separately, the company also disclosed that it had entered into a private placement agreement with Saudi Arabia’s Public Investment Fund (PIF) subsidiary Ayar Third Investment Company, a majority shareholder. As part of the agreement, Ayar will purchase from Lucid 265.69 million shares of common stock. Lucid will receive about $1.8 billion in gross proceeds.
The private placement will allow Ayar to maintain its roughly 60.5% ownership stake. It is expected to close on or about June 26. The completion of the private placement is contingent on the completion of the public offering referenced above.
Lucid Announces Public Offering and Private Placement of LCID Stock
The proceeds received from the public offering and private placement will be used toward general corporate expenses, such as capital expenditures and working capital. At the same time, Lucid’s issuance and sale of common stock will dilute existing shareholders.
“The issuance of additional shares of our common stock or other equity or equity-linked securities, or sales of a significant portion of our common stock, could depress the market price of our common stock,” warned the company.
Following the completion of the public offering and private placement, there will be 2.27 billion shares of LCID stock outstanding.
As of the end of the first quarter, Lucid had about $3.4 billion in cash and $700 million of available credit. The common stock offering may have taken shareholders by surprise, as CFO Sherry House stated that the cash balance should be enough to sustain business operations until Q2 of 2024. Lucid has also engaged in cost-cutting measures. For example, it announced in March that it would cut 18% of its workforce, or about 1,300 employees.
For 2023, Lucid has provided production guidance of between 10,000 and 14,000 vehicles. CEO Peter Rawlinson noted during Q1 that the company is “on track to produce over 10,000 vehicles in 2023.”
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.