Rivian News: Rivian Plans to Sell $1.3B in Bonds to Build Capital, Shares Fall

in Rivia Automotive plans to sell $1.3 billion worth of bonds, the company said on Monday, as weakening demand and high costs exacerbate cash shortages for electric vehicle makers.

Rivian shares fell nearly 7% after hours. Initial investors will have the option to buy additional $200 million worth of bonds to mature 13 days after the bonds are issued, Rivian said in a statement.

The capital from the offer will help facilitate the launch of the smaller Rivian R2 family of cars, a Rivian spokesman told Reuters, adding that the convertible debt was “the optimal cost of capital compared to selling shares at today’s levels.”

irvineCalifornia-based Rivian, which makes R1T electric pickups and R1S SUVs, said its cash balance will fund its operations through 2025. At the end of December, cash and cash equivalents were $11.57 billion compared to $13.27 billion a quarter earlier. .

In an effort to cut costs, the company laid off 6% of its workforce last month.

Late last year, the company shelved plans to build delivery vans. Europe With Mercedes and previously pushed back by a year to 2026 the planned launch of the smaller R2 family of vehicles at a $5 billion plant it is building in Georgia.

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Rivian, which is losing money on every car it makes, is forecasting 2023 production far below analysts’ estimates as it struggles with lingering supply chain bottlenecks after narrowly missing its target last year. Rivian said the bonds would be “green” bonds, which typically offer companies the opportunity to borrow more cheaply from investors who are willing to accept lower yields in exchange for supporting green projects.

Rivian’s bonds will mature in March 2029, and investors will have the option to convert the bonds into cash or shares in the electric car maker.

The interest rate, initial conversion rate and other terms of the bonds will be determined during the pricing of the offer.

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