Mullen Automotive (NASDAQ:MULN) stock is in focus following the electric vehicle (EV) company’s submission of a Form 8-K and a prospectus supplement related to the resale of up to 2.33 billion shares. Notably, the 8-K explains that Mullen “has completed all outstanding obligations to issue Series D Preferred Stock.”
On June 22 and June 26, Mullen and buyers under an existing securities purchase agreement (SPA) agreed to a deal that would see the buyers receive 165.35 million shares of MULN stock and pre-funded warrants exercisable for 457.34 million shares of common stock. Mullen also agreed to issue warrants exercisable for 684.97 million shares of common stock. This new agreement was in lieu of the buyers receiving 622.70 million shares of Series D preferred stock upon the exercise of their option.
Mullen has also agreed to replace a previous agreement for pre-funded warrants exercisable for 8.07 million shares and warrants exercisable for 50.99 million shares. Instead, Acuitas Capital will receive $13 million and warrants exercisable for 18.05 million shares. These warrants will have an exercise price of 52 cents per share. Acuitas had previously agreed to invest $20 million into Mullen on June 1.
MULN Stock: Mullen Completes Outstanding Series D Obligations
This morning, Mullen also announced a resale of up to 2.33 billion shares. The resale encompasses common stock, which includes common stock issuable upon the exercise of warrants and pre-funded warrants. The company will not receive proceeds from the resale of common stock, although it “may receive proceeds” from the exercise of warrants and the issuance of shares from the warrants. Proceeds from the warrants mentioned in Mullen’s filing would amount to about $139.4 million. These proceeds would be used toward general working capital.
Mullen lists several selling security holders. The top three sellers with respect to the maximum number of shares to be sold pursuant to the prospectus supplement, while assuming the conversion of all convertible securities, are:
- Esousa Holdings: 868.77 million shares.
- Acuitas Capital: 851.73 million shares.
- Davis-Rice Pty Limited: 425.87 million shares.
As of June 22, there were 643.37 million shares of common stock outstanding. This means that a resale of all 2.33 billion shares would increase the share count dramatically. In its “Risk Factors” section, Mullen warned:
“The issuance of shares of Common Stock upon the conversion of such shares of preferred stock would dilute the percentage ownership interest of holders of our Common Stock, dilute the book value per share of our Common Stock and increase the number of our publicly traded shares, which could depress the market price of our Common Stock.”
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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.
