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Magnolia Oil & Gas Corp. to Host Earnings Call

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Bloomberg

Lucid SPAC Gives Up Some of Giant Gain After Pact Confirmed

(Bloomberg) — Shares of the blank-check firm combining with electric-vehicle startup Lucid Motors Inc. plunged in U.S. trading after confirming the biggest SPAC merger yet to cash in on investor enthusiasm for battery-powered cars.Churchill Capital Corp IV, the special-purpose acquisition company run by financier Michael Klein, fell as much as 46% on Tuesday after confirming its merger with Lucid. The deal will generate about $4.4 billion in cash for the 14-year-old carmaker, which announced production of its debut model will be delayed to the second half of this year.The slump follows a dramatic 472% run-up in the shares since Bloomberg first reported on Jan. 11 that Lucid and Churchill were in talks. Lucid has shied away from comparisons to market leader Tesla Inc., but the public listing at a pro-forma equity value of $24 billion positions it to compete for a slice of what’s expected to become a rapidly growing market for EVs. It plans to use the newly acquired funds to bring vehicles to market and expand its factory in Casa Grande, Arizona.Traders often sell “sell on the news” after a long-rumored deal is consummated. The scope of Churchill’s decline was especially pronounced, signifying investors may also have been disappointed by the production delay or the terms of the deal. Lucid said it expects to need $600 million in bridge financing to bolster the company’s cash until the transaction with Churchill closes. The company expects negative free cash flow of around $10 billion through 2024, raising the question of how it will seek additional funds.Read More: Lucid Gives Sobering Look Under the SPAC Hood: Chris BryantThe reverse-merger represents the biggest capital injection for Lucid since Saudi Arabia’s Public Investment Fund invested more than $1 billion in 2018. The agreement included a $2.5 billion private placement in public equity, or PIPE, the largest of its kind on record for a SPAC deal. It was led by PIF as well as BlackRock, Fidelity Management, Franklin Templeton, Neuberger Berman, Wellington Management and Winslow Capital, according to a joint statement from Lucid and Churchill Capital.The placement sold at $15 a share — a 50% premium to Churchill’s net asset value — which translates into about $24 billion in pro-forma equity value, the companies said. The combined company has a transaction equity value of $11.8 billion.“I see the SPAC as just a tool, another lever to pull on, where we can accelerate our trajectory,” Lucid Chief Executive Officer Peter Rawlinson said in an interview. “This is a technology race. Tesla gets this. It’s why they are so valuable and Lucid also has the technology.”The SPAC is the largest run by Klein, a former Citigroup Inc. investment banker who has played a prominent role in guiding the Kingdom of Saudi Arabia’s investments, serving as an adviser to the PIF. Among other deals, he advised on the Saudi Aramco initial public offering.The Lucid transaction is expected to close in the second…



Read More: Magnolia Oil & Gas Corp. to Host Earnings Call

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