RIYADH: Electric vehicle manufacturer Lucid Group, majority-owned by Saudi Arabia’s Public Investment Fund, has closed a $1.1 billion offering of convertible senior notes due in 2030.
In a statement, the company said $935.6 million of the net proceeds will be used to repurchase approximately $1.05 billion in aggregate principal of its outstanding 1.25 percent convertible senior notes due 2026.
The offering also included the exercise of an option granted to initial purchasers, allowing them to acquire an additional $100 million in principal amount of the new notes.
The capital raise comes just days after Lucid reported first-quarter deliveries of 3,109 vehicles — a 58 percent increase from the same period last year.
Lucid’s offering of convertible senior notes is a way for the company to raise cash now by borrowing money that can later be converted into shares, while protecting existing investors from dilution.
Taoufiq Boussaid, chief financial officer at Lucid, said: “We are delighted to have completed this offering, which better positions Lucid for future growth and success, while strengthening our already close partnership with the PIF, and minimizing any effect to existing shareholders.”
He added: “The support of the PIF continues to be one of Lucid’s key strategic differentiators as we work together toward a more sustainable future.”
Lucid said PIF backed the transaction through a prepaid forward share purchase agreement, providing the company with upfront cash while allowing the fund to acquire shares at a future date.
The company also executed capped call transactions to increase the effective conversion price of the notes to $4.80 per share of Lucid’s Class A common stock.
It added that this conversion price is double the last reported sale price of Lucid’s Class A common stock on the Nasdaq Global Select Market, which stood at $2.40 as of April 2.
The capped call transaction limits the number of shares Lucid may issue to debt holders or investors, helping protect existing shareholders from dilution.
“As a result of the capped call transactions, dilution or cash obligations upon a conversion of the notes should be mitigated by such increase in the effective conversion price of the notes,” the company said.
Lucid used approximately $118.3 million of the net proceeds from the offering to cover the cost of the capped call transactions.
Convertible senior notes are a type of debt instrument companies use to raise capital.
These notes are considered “senior” in the capital structure, meaning they take precedence over other unsecured or subordinated debt in the event of liquidation, offering greater protection to investors.
Lucid said it intends to use the remainder of the net proceeds for general corporate purposes.
The company also retains the right to settle any conversions in cash, shares of its Class A common stock, or a combination of both, allowing flexibility in managing potential dilution or cash obligations, the statement concluded.
