Rivian plans to sell $1.3 billion in bonds to raise capital, shares fall

SAN FRANCISCO, March 6 (Reuters) – Rivian Automotive ( RIVN.O ) plans to sell $1.3 billion worth of bonds, it said on Monday, as weak demand and high costs tighten a cash crunch around electric vehicle makers.

Shares of Rivian fell nearly 7% in after-hours trading.

13 days after the bonds are issued, initial investors will have the option to purchase an additional $200 million in bonds for settlement, Rivian said in a statement.

Capital from the offering will help launch Rivian’s smaller R2 family of vehicles, a Rivian spokeswoman told Reuters, adding that the convertible debt was “an optimal cost of capital versus selling equity at today’s levels.”

California-based Rivian Irvine, which makes the R1T electric pickup trucks and R1S SUVs, has said its cash reserves will fund its operations through 2025. It reported cash and cash equivalents of $11.57 billion at the end of December, up from $13.27 billion a quarter earlier. previous

In an effort to cut costs, the company last month He was fired 6% of its workforce.

Late last year, it dropped plans to build delivery vans in Europe with Mercedes ( MBGn.DE ) and pushed back by a year to 2026 plans for a smaller R2 family of vehicles at a $5 billion plant it is building in Georgia.

Rivian, which has been losing money on every vehicle it makes, has forecast 2023 production below analysts’ estimates as it struggles with lingering supply chain disruptions after missing last year’s target.

Rivian said the bonds would be “green” bonds, which typically give companies an opportunity to raise debt more cheaply from investors willing to pay less to support green projects.

Rivian’s bond matures in March 2029 and investors can exchange the bonds for cash or stock in the EV maker.

The interest rate, initial exchange rate and other terms of the securities are determined at the issue price.

Reporting by Abirub Roy in San Francisco and Isla Binny in New York; Editing by Leslie Adler and Chris Reese

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