Lucid Group, Inc. Announces Public Offering of Common Stock and Corresponding Investment by an Affiliate of PIF

Rhea-AI Summary

Lucid Group (Nasdaq: LCID) has announced a public offering of 262,446,931 shares of common stock, with an option for the underwriter to purchase up to 39,367,040 additional shares. BofA Securities is the sole underwriter. Concurrently, Lucid's majority stockholder, Ayar Third Investment Company, an affiliate of the Public Investment Fund (PIF), intends to purchase 374,717,927 shares in a private placement at the same price, maintaining its approximate 58.8% ownership.

The net proceeds from both the public offering and private placement will be used for general corporate purposes, including capital expenditures and working capital. The offering is being made pursuant to Lucid's effective shelf registration statement on Form S-3.

Positive

• Significant capital raise through public offering and private placement
• Continued support from majority stockholder PIF
• Funds to be used for capital expenditures and working capital

Negative

• Potential dilution for existing shareholders
• Large increase in outstanding shares

Insights

Financial Analyst

Lucid's announcement of a substantial public offering and private placement is a significant move that will have far-reaching implications for the company's financial position and market perception. The offering of 262,446,931 shares in the public market, with an option for an additional 39,367,040 shares, coupled with a private placement of 374,717,927 shares to Ayar, represents a massive capital raise.

This influx of capital will substantially bolster Lucid's balance sheet, providing important funds for "general corporate purposes" including capital expenditures and working capital. For a company in the capital-intensive EV industry, this financial cushion is vital for scaling operations, research and development and potentially weathering any market downturns.

However, investors should note the significant dilution this will cause to existing shareholders. The maintenance of Ayar's 58.8% ownership stake indicates that other shareholders will see their proportional ownership decrease. This dilution could put downward pressure on the stock price in the short term.

The continued backing by PIF through Ayar sends a strong signal of confidence in Lucid's long-term prospects, which may help mitigate some market concerns. Overall, while this move strengthens Lucid's financial position, it comes at the cost of significant shareholder dilution, making it a double-edged sword for investors.

Market Research Analyst

This capital raise by Lucid is a strategic move that reflects both the company's ambitious growth plans and the challenging landscape of the EV market. The timing is crucial, coming amidst a period of intense competition and economic uncertainty in the automotive sector.

The substantial size of this offering suggests Lucid is preparing for significant operational expansion or anticipating a prolonged period of high cash burn. This could indicate upcoming announcements of new models, expansion into new markets, or increased production capacity. However, it also raises questions about the company's current cash position and burn rate.

Investor sentiment may be mixed. While the capital injection is positive for Lucid's growth prospects, the dilution could be viewed negatively. The market's reaction will likely depend on how effectively Lucid communicates its plans for utilizing these funds.

The continued strong backing from PIF is a key positive, providing stability and long-term support. This could help attract other institutional investors who may see PIF's commitment as a vote of confidence in Lucid's future.

Overall, this move positions Lucid more robustly in the competitive EV landscape but at a cost to current shareholders. The company's execution in the coming months will be critical in justifying this significant capital raise.

NEWARK, Calif., Oct. 16, 2024 /PRNewswire/ -- Lucid Group, Inc. (Nasdaq: LCID; "Lucid") announced today the commencement of a public offering of 262,446,931 shares of its common stock. The underwriter may offer the shares of common stock from time to time for sale in one or more transactions to purchasers directly, through agents or through brokers in brokerage transactions on Nasdaq, in the over-the-counter market, through negotiated transactions or in a combination of such methods, or otherwise at a fixed price or prices, which may be changed, at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices.

Lucid intends to grant the underwriter a 30-day option to purchase up to 39,367,040 additional shares of its common stock.

BofA Securities is acting as the sole underwriter for the public offering.

In addition, Lucid's majority stockholder and affiliate of the Public Investment Fund ("PIF"), Ayar Third Investment Company ("Ayar"), has indicated that they intend to purchase 374,717,927 shares of common stock from Lucid in a private placement concurrently with the public offering, subject to certain conditions, at the same price per share initially to be paid by the underwriter for the public offering. The private placement is subject to completion of the public offering and customary closing conditions. As a result of these purchases, Ayar expects to maintain its approximate 58.8% ownership of Lucid's outstanding common stock. In addition, Ayar has indicated that they intend to purchase from us, in the event that the underwriter exercises its option, additional shares of our common stock to maintain its ownership of Lucid's outstanding common stock, and an additional closing for such purchase would be held 10 days after the underwriter's exercise of its option.

Lucid intends to use the net proceeds from the public offering, as well as from the private placement by its majority stockholder, for general corporate purposes, which may include, among other things, capital expenditures and working capital.

The public offering is being made pursuant to Lucid's effective shelf registration statement on Form S-3, including a base prospectus, filed with the Securities and Exchange Commission (the "SEC") and a prospectus supplement relating to the public offering. Prospective investors should read the preliminary prospectus supplement and the accompanying base prospectus in that registration statement and other documents that Lucid has filed or will file with the SEC for information about Lucid and the public offering. You may obtain these documents for free by visiting EDGAR on the SEC's website at www.sec.gov. Alternatively, copies of the preliminary prospectus supplement and the base prospectus may be obtained from BofA Securities, Inc., NC1-022-02-25, 201 North Tryon Street, Charlotte, NC 28255-0001, Attn: Prospectus Department, or by email at dg.prospectus_requests@bofa.com.

This press release does not constitute an offer to sell or the solicitation of an offer to buy shares of Lucid's common stock, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

Investor Relations Contact
investor@lucidmotors.com

Media Contact
media@lucidmotors.com

Trademarks
This communication contains trademarks, service marks, trade names and copyrights of Lucid Group, Inc. and its subsidiaries and other companies, which are the property of their respective owners.

Forward-Looking Statements
This communication includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as "estimate," "plan," "project," "forecast," "intend," "will," "shall," "expect," "anticipate," "believe," "seek," "target," "continue," "could," "may," "might," "possible," "potential," "predict" or other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding plans and expectations with respect to Lucid's registration statement on Form S-3, the timing, size and use of proceeds, if any, of the public offering and any private placement of shares of Lucid's common stock to Lucid's majority stockholder, any potential future offering or capital raises, the promise of Lucid's technology, and the goal of Lucid. These statements are based on various assumptions, whether or not identified in this communication, and on the current expectations of Lucid's management. These forward-looking statements are not intended to serve as, and must not be relied on by any investor as, a guarantee, an assurance, or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and may differ from these forward-looking statements. Many actual events and circumstances are beyond the control of Lucid. These forward-looking statements are subject to a number of risks and uncertainties, including those factors discussed under the heading "Risk Factors" in Part II, Item 1A. of Lucid's Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, as well as other documents Lucid has filed or will file with the SEC. If any of these risks materialize or Lucid's assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that Lucid currently does not know or that Lucid currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect Lucid's expectations, plans or forecasts of future events and views as of the date of this communication. Lucid anticipates that subsequent events and developments will cause Lucid's assessments to change. However, while Lucid may elect to update these forward-looking statements at some point in the future, Lucid specifically disclaims any obligation to do so, except as may be required under applicable securities laws. These forward-looking statements should not be relied upon as representing Lucid's assessments as of any date subsequent to the date of this communication. Accordingly, undue reliance should not be placed upon the forward-looking statements.

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SOURCE Lucid Group

FAQ

How many shares is Lucid Group (LCID) offering in its public offering?

Lucid Group is offering 262,446,931 shares of common stock in its public offering, with an option for the underwriter to purchase up to 39,367,040 additional shares.

Who is the underwriter for Lucid Group's (LCID) public offering?

BofA Securities is acting as the sole underwriter for Lucid Group's public offering.

How many shares is Ayar Third Investment Company purchasing in the private placement?

Ayar Third Investment Company intends to purchase 374,717,927 shares of Lucid Group (LCID) common stock in a private placement concurrent with the public offering.

What will Lucid Group (LCID) use the proceeds from the offering for?

Lucid Group intends to use the net proceeds from both the public offering and private placement for general corporate purposes, which may include capital expenditures and working capital.

Will the private placement affect Ayar's ownership percentage in Lucid Group (LCID)?

No, Ayar Third Investment Company expects to maintain its approximate 58.8% ownership of Lucid Group's outstanding common stock after the private placement.