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Lucid Group to Raise $3 Billion, Primarily from Saudi’s PIF

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Lucid Plans to Raise $3 Billion, with Saudi’s PIF as Key Investor

Lucid Group, a producer of upscale electric vehicles, has set its sights on raising roughly $3 billion through a stock offering, with the Saudi Arabian Public Investment Fund (PIF) contributing close to 66% of the overall amount. The announcement caused Lucid’s shares to drop 9% in after-hours trading.

PIF Commits to Private Placement, Investing $1.8 Billion

As part of the stock offering, PIF, which already owns over 60% of Lucid, has agreed to purchase 265.7 million shares in a private placement, amounting to around $1.8 billion. This move implies a price of approximately $6.80 per Lucid share, below the Wednesday closing price of $7.76.

Public Offering to Raise Remaining Funds

The remaining portion of the $3 billion will be raised through a public offering of 173.5 million shares of common stock. Lucid aims to secure the additional funds as the company, like its competitors, faces challenges such as mounting losses and tight cash reserves amid a potential recession and price competition led by Tesla.

Financial Considerations and Market Challenges

While some experts anticipate a positive response to the secondary offering due to the availability of environmental, social, and governance (ESG) investments, others caution that Lucid’s burn rate needs to decrease rapidly. The US market is witnessing an abundance of electric vehicles (EVs) for sale, resulting in price cuts and discounts from competitors.

Lucid’s Financial Position and Production Outlook

Lucid’s cash and cash equivalents declined to $900 million in Q1, compared to $1.74 billion in the previous quarter. The company’s CFO expressed that Lucid had approximately $4.1 billion in liquidity, which would support operations until at least Q2 of the following year.

Lucid recently adjusted its 2023 production forecast and reported lower-than-expected first-quarter revenue, citing challenges posed by rising interest rates.

Saudi’s PIF’s Ongoing Support and Lucid’s Future Plans

Despite the difficulties faced by Lucid, Saudi’s PIF, led by Crown Prince Mohammed bin Salman, remains a loyal investor, holding a stake currently valued at nearly $9 billion.

Lucid continues its partnership with Saudi Arabia, constructing its first overseas production factory there and securing a government commitment to purchase up to 100,000 Lucid vehicles over the next decade.

The net proceeds from the stock offerings will be utilized for various corporate purposes, including capital expenditure and working capital, as Lucid prepares to launch its Gravity sport utility vehicle in 2024. Bank of America Corp is serving as the book-running manager for the public offering.


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