Electric car maker Lucid will raise $3 billion, mainly from Saudi PIF

May 31 (Reuters) – Lucid Group ( LCID.O ) said it plans to raise about $3 billion through a stock offering, nearly two-thirds of which will come from Saudi Arabia’s Public Investment Fund (PIF), which is sending shares of luxury electric – The vehicle maker was down 9% after market hours.

PIF, which owns more than 60% of the company, has agreed to buy 265.7 million shares in a private placement for about $1.8 billion, Lucid said, implying a price of about $6.80 per Lucid- share, compared to the stock’s Wednesday close of $7.76.

The rest will be obtained from a public offer of 173.5 million shares.

The extra funds are critical and come as the automaker, like its peers, struggles with mounting losses and tightening cash reserves amid recession fears and a price war sparked by market leader Tesla Inc ( TSLA.O ).

“The secondary offering will probably be OK as there are a lot of ESG dollars looking for investment,” said Louis Navellier, chief investment officer at money management firm Navellier, which has made EV and related investments but has stayed away from Lucid.

“That, along with money from the Saudis, will ensure that Lucid survives for another couple of years. But their burn rate will have to drop quickly. There is an abundance of electric cars for sale in the US, and competitors are cutting prices and offering discounts,” he said.

Lucid’s cash and cash equivalents had fallen to $900 million at the end of the first quarter, from $1.74 billion in the previous quarter.

CFO Sherry House had said the company had about $4.1 billion in cash, enough to fund the electric car maker at least into the second quarter of next year.

The maker of luxury Air sedans trimmed its 2023 production forecast this month and reported lower-than-expected first-quarter earnings, with CEO Peter Rawlinson citing rising interest rates as a challenge for the market.

Despite Lucid’s struggles, Saudi PIF, led by Crown Prince Mohammed bin Salman, has been a loyal investor in the automaker with its stake currently worth nearly $9 billion.

The California-based electric car maker is building its first overseas manufacturing plant in Saudi Arabia, and the Saudi government has agreed to buy up to 100,000 Lucid cars over the next decade.

On Wednesday, Lucid, which is set to unveil its Gravity sports utility later this year ahead of its 2024 launch, said it plans to use the net proceeds from the offerings for general corporate purposes, including capital expenditures and working capital.

Bank of America Corp ( BAC.N ) is acting as bookrunner for the public offering. The fundraiser was first reported by Bloomberg News.

Reporting by Kanjyik Ghosh and Akriti Sharma in Bengaluru and Abhirup Roy in San Francisco; Editing by Devika Syamnath and Muralikumar Anantharaman

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