SAN FRANCISCO, March 6 (Portal) – Rivian Automotive (RIVN.O) plans to sell $1.3 billion worth of bonds, it said on Monday, as weakening demand and high costs are fueling the liquidity crunch among automakers electric vehicle manufacturers.
Rivian shares fell nearly 7% in after-hours trading.
Initial investors will have an option to purchase an additional $200 million of the bonds for settlement 13 days after the bonds are issued, Rivian said in a statement.
The capital from this offering will help facilitate the launch of Rivian’s smaller R2 family of vehicles, a Rivian spokesman told Portal, adding that convertible bonds are “optimal cost of capital compared to selling equity at today’s levels.”
Irvine, California-based Rivian, which makes R1T electric pickup trucks and R1S SUVs, has announced that its cash on hand will fund its operations through 2025. At the end of December, the company reported cash and cash equivalents of $11.57 billion, compared to $13.27 billion a quarter earlier.
To cut costs, the company laid off 6% of its workforce last month.
Late last year, the company put plans to build vans in Europe with Mercedes (MBGn.DE) on hold, having previously rescheduled plans to launch a smaller R2 family of vehicles at the $5 billion plant it is building in Georgia postponed one year to 2026.
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Rivian, which has lost money on every vehicle it builds, is forecasting 2023 production well below analysts’ estimates as it struggles with ongoing supply chain shortages after narrowly missing its target last year.
Rivian said the bonds are “green” bonds, which typically allow companies to borrow more cheaply from investors willing to accept lower yields in exchange for supporting green projects.
Rivian’s bond matures in March 2029 and investors have the option to convert the bonds into cash or shares in the electric vehicle maker.
The interest rate, initial conversion rate and other terms of the bonds are set at the price of the offering.
reporting from Abhirup Roy in San Francisco and Isla Binnie in New York; Edited by Leslie Adler and Chris Reese
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