Lucid Group Announces $1 Billion Convertible Senior Notes Offering

Lucid's offering comprises 5.00% convertible senior notes due April 1, 2030. These notes will be sold to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933. The settlement of the notes is scheduled for approximately April 8, 2025, contingent upon customary closing conditions being met. As part of the offering, the initial purchasers have been granted an option to acquire an additional $100 million in principal amount of notes within 13 days of the initial issuance.

The notes represent senior, unsecured obligations of Lucid and will accrue interest at a 5.00% annual rate, payable semi-annually on April 1 and October 1, starting in October 2025. The maturity date for these notes is set for April 1, 2030. Before January 1, 2030, conversion rights are limited to specific events and periods, but after that date, noteholders may convert their notes at any time until the business day preceding the maturity date.

The initial conversion rate is pegged at 333.3333 shares of Lucid's Class A common stock per $1,000 principal amount of notes, translating to an initial conversion price of approximately $3.00 per share. This price reflects a premium of roughly 25% over Lucid's last reported stock price of $2.40 on April 2, 2025.

Lucid estimates that the net proceeds from this offering will be around $983.6 million, or approximately $1.08 billion if the initial purchasers fully exercise their option. The company plans to allocate approximately $935.6 million of the net proceeds towards repurchasing its outstanding 1.25% Convertible Senior Notes due 2026. The remaining $107.5 million will cover the costs associated with capped call transactions related to the offering.

To manage the potential dilution from the notes, Lucid has engaged in capped call transactions with certain initial purchasers or their affiliates. These transactions are designed to cover the number of shares that initially underlie the notes, with an initial cap price set at $4.80 per share, representing a 100% premium over Lucid's last stock price. The capped call transactions are expected to mitigate potential dilution upon conversion of the notes, effectively offsetting any cash payments that may exceed the principal amount of converted notes.

In conjunction with the offering, Lucid has entered into separate transactions to repurchase a portion of its 2026 notes, negotiated individually with specific holders. Additionally, Ayar Third Investment Company, a subsidiary of Saudi Arabia's Public Investment Fund, has initiated a prepaid forward transaction expected to involve the purchase of approximately $430 million in Lucid's common stock, with settlement anticipated around the maturity date of the notes.

As Lucid continues to position itself as a leader in the EV market, this $1 billion convertible notes offering represents a strategic step towards strengthening its financial foundation. The proceeds are set to bolster the company’s balance sheet, facilitate repurchase of existing debt, and support ongoing innovation and expansion efforts. With a focus on providing advanced EV technology, Lucid aims to enhance its market presence while navigating the complexities of the evolving automotive landscape.

For further updates and detailed information regarding these transactions, Lucid Group plans to file a Current Report on Form 8-K with the Securities and Exchange Commission around April 8, 2025.