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Lucid SPAC abandons part of giant win after pact confirmation
(Bloomberg) – Shares of the blank check company combining with electric vehicle start-up Lucid Motors Inc. have plunged into U.S. trading after confirming the largest PSPC merger that has yet to capitalize on investor enthusiasm for battery cars. the special purpose acquisition company led by financier Michael Klein, fell to 46% on Tuesday after confirming its merger with Lucid. The deal will generate around $ 4.4 billion in cash for the 14-year-old automaker, which announced that production of its first model would be postponed until the second half of this year. The drop follows a dramatic rise of 472 % Shares since Bloomberg first reported on Jan.11 that Lucid and Churchill were in talks. Lucid has avoided comparisons with market leader Tesla Inc., but the public listing at a pro-forma value of $ 24 billion positions him to compete for a share of what is expected to become a rapidly growing market for electric vehicles. . He plans to use the newly acquired funds to bring vehicles to market and expand his plant in Casa Grande, Arizona. Traders often sell “sell news” after a long-standing deal has been struck. The extent of Churchill’s decline was particularly pronounced, meaning investors may also have been disappointed with the production delay or the terms of the deal. Lucid said he expects to need $ 600 million in bridge financing to bolster the company’s liquidity until the Churchill deal closes. The company expects negative free cash flow of around $ 10 billion through 2024, which begs the question of how it will seek additional funds.Read More: Lucid gives a sober look under the hood from PSPC: Chris Bryant The reverse merger represents the largest injection of capital for Lucid since Saudi Arabia’s Public Investment Fund invested more than $ 1 billion in 2018. The deal included a private placement of $ 2 billion. $ 5 billion in public actions, or PIPE, the largest of its kind on record for a PSPC deal. It was led by PIF as well as BlackRock, Fidelity Management, Franklin Templeton, Neuberger Berman, Wellington Management and Winslow Capital, according to a joint statement from Lucid and Churchill Capital. The placement sold for $ 15 a share – a 50% premium to Churchill’s net asset value – which translates to about $ 24 billion in pro-forma value, the companies said. The combined company has a transaction value of $ 11.8 billion. “I see PSPC as just a tool, another lever on which we can accelerate our trajectory,” said Peter Rawlinson, CEO of Lucid, in an interview. “It’s a technological race. Tesla understands this. This is why they are so valuable and Lucid also has the technology. PSPC is the largest company led by Klein, a former investment banker of Citigroup Inc. who played a leading role in guiding the Kingdom of Saudi Arabia’s investments, as an advisor to the PIF . He notably advised on Saudi Aramco’s initial public offering. The Lucid deal is expected to close in the second quarter. Lucid previously announced that deliveries of his first EV, a luxury sedan called Air, would begin in the second quarter. . The company has now decided not to commit to a start date for the $ 169,000 car following discussions with Churchill Capital, Rawlinson said. It plans to eventually produce more affordable versions of the Air and a battery-powered electric SUV. The Casa Grande plant has currently installed a production capacity of 34,000 units per year, based on three shifts. , said Rawlinson. Lucid hopes to increase this capacity to 85,000 units per year by 2023, after additional investment. Lucid expects deliveries of 20,000 vehicles in 2022, generating sales of $ 2.2 billion. It sees its revenues grow to $ 5.5 billion and $ 9.9 billion in 2023 and 2024, respectively, according to an investor presentation posted on its website. The company projects positive earnings before interest, taxes, depreciation, and amortization of $ 592 million in 2024. Beyond its manufacturing capacity, Lucid plans to invest heavily in new products and will increase its workforce to 5,000 over the next year. next year, Rawlinson said. challenge Tesla in the still niche market for premium EV sedans. The Air model has a range of 517 miles on a single charge, based on estimates from the Environmental Protection Agency. It can reach zero to 60 miles per hour in 2.5 seconds and has access to Electrify America’s network of DC fast chargers. It’s on par with the Model S Plaid +, which has a maximum range of around 520 miles, a zero to 60 time of under 2 seconds, and access to Tesla’s nationwide network of fast chargers. Re of Musk’s market capitalization of Lucid is just a fraction of Tesla’s roughly $ 686 billion valuation, but not bad for a luxury electric vehicle maker that has yet to deliver its first car. Rawlinson has repeatedly stated that Lucid is not a direct competitor to Tesla because the price of his business exceeds the mass market buyers Elon Musk aspires to reach, but there are signs of an emerging rivalry. . whose head office is just 16 miles from Tesla in Palo Alto – says its first electric vehicle will go the distance against the longer-range Model S sedan. Lucid’s new plant sprang up from the Arizona desert as quickly as Tesla’s in China. And the growing interest in the startup and its CEO has drawn the wrath of none other than Musk. Rawlinson and Musk have a complicated history. Lucid CEO was chief engineer on Tesla’s flagship Model S, but Musk downplayed his role in its development and also accused him in a tweet of leaving the company “in embarrassment as things got tough. In 2012. is also working on energy storage solutions similar to Tesla’s Powerwall. The company wants to use the same battery technology in its cars to develop batteries to power homes and utility devices and already has working prototypes, Rawlinson said. (Updates with explanation of the inventory collapse in fourth paragraph) Visit us at bloomberg.com Subscribe now to stay ahead with the most trusted source of business news. © 2021 Bloomberg LP
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