Shares of Archer Aviation (NASDAQ:ACHR) are in the green following a massive purchase from Stellantis (NYSE:STLA). According to a Form 4 received yesterday after the market close, Stellantis acquired 12.31 million shares of ACHR stock on Oct. 16. The shares were acquired at an average per share price of $5.68 and were pursuant to a forward purchase agreement (FPA) established on Jan. 3. In total, the purchase was worth $69.99 million. Shareholders should note that this was not a spontaneous purchase:
“On August 10, 2023, Stellantis waived certain conditions provided for in the Stellantis Forward Purchase Agreement relating to our actual achievement pursuant to Milestone 2 (as defined in the Stellantis Forward Purchase Agreement). In connection with this, we submitted an election notice to draw down upon the $70.0 million applicable to Milestone 2, which equals 12,313,234 shares of Common Stock,” said Archer in its earnings for the period ended June 30.
Following the purchase, Stellantis now beneficially owns 33.79 million shares of ACHR stock, equivalent to a 15.1% ownership stake.
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There are a total of three milestones in the FPA. Milestone 1 notes that Stellantis would acquire $25 million worth of shares in a private placement after the two companies entered into a manufacturing collaboration agreement. The first criterion for Milestone 2, which relates to the 12.31 million shares acquired by Stellantis, states that:
“On or after June 30, 2023, provided that: (i) the Federal Aviation Administration has accepted, pursuant to 14 CFR § 23.2010, means of compliance submitted by the Company for each of the Airworthiness Criteria.” However, as Archer noted, Stellantis agreed to waive certain criteria in Milestone 2.
The completion of Milestone 3 would see Stellantis acquire $55 million worth of ACHR in a private placement. The first criterion reads:
“On or after January 1, 2024, provided that: (i) the Company has completed a Full Transition to Wing-Borne Flight with respect to either Midnight-0 or Midnight.” Midnight-0 refers to the pre-production version of the Midnight aircraft that is equipped with Archer’s latest powertrain technology.
The remaining two criteria relate to whether Archer is financially solvent without taking into account the $55 million private placement, as well as if its auditor has issued a going concern warning within the past 12 months.
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.
