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PIF extending loan facility + acquiring more shares in Lucid: A unit of the Public Investment Fund (PIF) is pouring a total of USD 1.5 bn in US luxury EV manufacturer Lucid, according to a statement (pdf). The Saudi sovereign wealth fund’s Ayar Third Investment has reached an agreement with Lucid to take USD 750 mn worth of convertible preferred stock via private placement, and commit an additional USD 750 mn through an unsecured delayed draw term loan facility (DDL).
The proceeds will finance the company’s capex and working capital, among other things, the statement reads.
What we don’t know: The statement doesn’t provide details on the conditions for the conversion or the implied price per share at which Ayar is buying in, nor does it disclose the withdrawal limits or periods for the DDL.
Lucid has not yet tapped the DDL, which could signal that the company is keeping it as a fall-back option if it needs more funding to tap into. Lucid CEO Peter Rawlinson said in March that his company cannot depend on the “bottomless wealth” of its Saudi owner and therefore needs to raise funds this year. “It’s inevitable we need to raise in the future, it’s just a question of when,” Rawlinson told the salmon-colored paper. “We need to pick our moment.”
REMEMBER- This is Ayar’s second investment in Lucid this year, after it took USD 1 bn in convertible preferred stocks last March to fund the EV maker’s capex and working capital.
SOUND SMART- Convertible preferred stock is essentially a kind of hybrid between equity and a bond. There are three keys here: “Preferred” means that Ayar gets dividend payments if Lucid starts making them, just like regular preferred stock. But Ayar is also locking in upside: It’s not buying common stock in the company. If the value of Lucid’s shares go above the price at which Ayar bought in, it can — if it wants — swap its convertible preferred stock for ordinary shares and book the difference in value as gain on the investment.
What about delayed draw term loans? These operate like any other loan facility, only with the caveat that they are withdrawn in set intervals — allowing for withdrawal periods every three, six, or nine months — within certain limits, which are both agreed in advance. Lenders could also link withdrawal periods with certain KPIs, if they wish.
LUCID IS STILL IN THE RED-
The EV maker reported a net loss of USD 665.8 mn in 2Q 2024 while revenues for the quarter rose 32.9% y-o-y to USD 200.6 mn, according to its latest earnings release (pdf).
On a six-month basis: Lucid recorded USD 1.29 bn in losses in 1H 2024, while revenues increased 24.3% in the first half of the year to USD 373.3 mn in 1H 2024.
Delivery rates + liquidity aren’t looking too bad: Lucid delivered about 2.4k vehicles in this quarter, up 70.5% compared to 2Q 2023, and expects to manufacture approximately 9k vehicles in 2024. The company ended 2Q with USD 4.28 bn of total liquidity and an additional USD 1.5 bn commitment by a PIF affiliate in order to fund its plans until the end of 2025.
REMEMBER- The EV industry has been slowing down: Lucid Motors’ shares were down 31% in March compared to the beginning of the year. BYD experienced its slowest quarterly bottomline growth in two years in April due to the slowdown in the momentum of EV sales, leading to a 6.1% drop in the company’s Hong Kong shares. Many experts have expressed that the US appetite for EVs — which rose to a peak during covid — has fallen off.
