Lucid plans $1 billion convertible note offering

NEWARK, Calif. - Lucid Group, Inc. (NASDAQ:LCID), known for its luxury electric vehicles and currently trading at $2.40 per share, announced its plan to offer $1 billion in convertible senior notes due in 2030. According to InvestingPro analysis, the company maintains strong liquidity with a current ratio of 4.18, though it faces challenges with rapid cash burn. InvestingPro’s Fair Value analysis suggests the stock is currently trading near its fair value. This private offering targets qualified institutional buyers, with an additional option for the initial purchasers to buy up to $100 million more in notes within a 13-day period from issuance.

The notes, set to mature on April 1, 2030, will be senior, unsecured obligations of Lucid, accruing interest payable semi-annually. They will be redeemable at Lucid’s discretion after April 6, 2028, and before the maturity date under specific conditions. The interest rate, initial conversion rate, and other terms will be determined when the offering is priced. With revenue growth of 35.7% in the last twelve months and a market capitalization of $7.26 billion, Lucid continues to expand despite challenging market conditions.

Lucid intends to allocate the net proceeds to repurchase a portion of its outstanding 1.25% Convertible Senior Notes due in 2026 and fund capped call transactions, which aim to minimize dilution from the conversion of the new notes. Any remaining proceeds will be used for general corporate purposes.

In conjunction with this offering, Lucid plans to engage in capped call transactions to reduce potential dilution and/or offset cash payments required upon conversion of the notes. If the additional notes option is exercised, Lucid will enter into further capped call transactions.

Additionally, Lucid anticipates that Ayar Third Investment Company, a subsidiary of the Public Investment Fund of Saudi Arabia, will enter into a prepaid forward transaction with an affiliate of one of the initial purchasers. This transaction is expected to support derivative transactions between the forward counterparty and investors in the notes.

The offering and sale of the notes, along with any shares of Lucid’s common stock issuable upon conversion, have not been registered under the Securities Act or any other securities laws. As such, the notes and shares can only be offered or sold under an exemption from, or in a transaction not subject to, these registration requirements.

This news is based on a press release statement, and further details regarding these transactions will be available in Lucid’s Current Report on Form 8-K, which is intended to be filed with the Securities and Exchange Commission. For investors seeking deeper insights into Lucid’s financial health and growth prospects, InvestingPro offers comprehensive analysis with 12 additional ProTips and detailed financial metrics in its Pro Research Report, one of 1,400+ company deep-dives available to subscribers.

In other recent news, Lucid Group has reported its production and delivery figures for the first quarter of 2025, producing 2,212 vehicles and delivering 3,109 units. Over 600 vehicles are on their way to Saudi Arabia for final assembly. Meanwhile, Cantor Fitzgerald has maintained a Neutral rating on Lucid’s stock with a price target of $3.00, noting the company’s forecasted production goal of 20,000 vehicles for fiscal year 2025, which aligns with the firm’s estimates and exceeds consensus expectations. Despite recognizing Lucid’s technological advancements in battery efficiency and performance, Cantor Fitzgerald remains cautious due to high negative gross margins, the need for additional capital, and recent management changes.

Additionally, Lucid is facing delays in the delivery of its Gravity SUV, reportedly due to unresolved safety testing issues. These delays have raised concerns about the company’s ability to meet production targets. Interim CEO Marc Winterhoff has indicated that deliveries to U.S. customers are expected to begin by the end of April, although volumes may be limited initially. Investors continue to watch closely as Lucid navigates these operational challenges and strives to enhance its market position in the competitive electric vehicle sector.

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