Tesla Rival Lucid Raises $1 Billion Via Convertible Debt To Refinance 2026 Notes And Boost Financial Flexibility

Lucid Group, Inc. LCID announced on Thursday the pricing of its private institutional offering of $1 billion aggregate principal amount of 5.00% convertible senior notes due 2030.Lucid also granted the initial purchasers of the notes an option to purchase up to an additional $0.1 billion principal amount of notes. The notes will be Lucid’s senior unsecured obligations.Also Read: Tesla’s Deliveries Slide In Q1 Amid Production Setbacks, Political BacklashThey will accrue interest at a rate of 5.00% per annum, payable semi-annually in arrears on April 1 and October 1 of each year, beginning October 1, 2025.The notes will mature on April 1, 2030, unless earlier repurchased, redeemed, or converted. Before January 1, 2030, noteholders will have the right to convert their notes.The initial conversion rate is 333.3333 shares of common stock per $1,000 principal amount of notes, representing an initial conversion price of approximately $3.00 per share of common stock, implying a premium of 25.0%.The notes will be redeemable if the last reported sale price per share of Lucid’s common stock exceeds 130% of the conversion price.Lucid estimates that the net proceeds from the offering will be approximately $983.6 million.Together with cash on hand, Lucid intends to use approximately $935.6 million of the net proceeds from the offering to fund repurchases of approximately $1,052.5 million aggregate principal amount of its outstanding 1.25% Convertible Senior Notes due 2026 and $107.5 million of the net proceeds to pay the cost of the capped call transactions.The cap price of the capped call transactions is initially $4.80 per share of Lucid’s common stock, representing a premium of 100.0%.Concurrently with the pricing of the notes, Lucid entered into one or more separate and individually negotiated transactions with certain holders of the 2026 notes to repurchase for cash a portion of the 2026 notes on terms negotiated with each such holder.Lucid Group stock gained over 13% in the last 30 days. Interim CEO Marc Winteroff highlighted a sharp increase in orders from former Tesla Inc TSLA owners.Winteroff reportedly said that 50% of new orders in the past two months have come from ex-Tesla customers. He attributed the surge in demand to negative sentiment surrounding Tesla chief Elon Musk, citing his recent political involvement and growing frustration among Tesla owners.Morgan Stanley analyst Adam Jonas noted Lucid could utilize strategic and independent partnerships to expand its electric vehicle manufacturing capacity. The company stands to gain from the U.S.’s heightened emphasis on domestic EV manufacturing, particularly given China’s dominance in the industry.Lucid’s Gravity SUV demonstrates the company’s second-generation software-defined vehicle architecture significantly.Lucid said it produced 3,386 vehicles in the fourth quarter and delivered 3,099. The company ended the quarter with approximately $6.13 billion in total liquidity.Price Action: LCID stock closed lower by 4.58% at $2.29 premarket at the last check on Thursday.Read Next:Chip Giants Arm, Qualcomm Target Alphawave To Capture AI Success Like BroadcomPhoto by Around the World Photos on Shutterstock