SAN FRANCISCO, March 6 (Reuters) – Rivian Automotive ( RIVN.O ) plans to sell $1.3 billion worth of bonds, it said on Monday, as weakening demand and high costs tighten the cash crunch surrounding electric car makers.
Shares in Rivian fell nearly 7% in after-hours trading.
Original investors will have an option to buy 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 Reuters, adding that the convertible debt was “optimal cost of capital versus sale of equity at today’s levels.”
Irvine, Calif.-based Rivian, which makes the R1T electric pickup trucks and R1S SUVs, has said its cash flow will fund its operations through 2025. It reported cash and cash equivalents of $11.57 billion at the end of December, down from $13.27 billion in the previous quarter.
In an effort to cut costs, the company last month laid off 6% of its workforce.
Late last year it shelved plans to build vans in Europe with Mercedes ( MBGn.DE ) and had earlier pushed back a year to 2026 the planned launch of a smaller R2 family of vehicles at the $5 billion plant it built in Georgia.
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Rivian, which has lost money on every vehicle it builds, forecasts 2023 output well below analysts’ estimates as it grapples with persistent supply chain bottlenecks after hitting its target last year.
Rivian said the bonds would be “green,” which typically allow companies to raise debt more cheaply from investors willing to take lower returns in exchange for supporting green projects.
Rivian’s bond expires 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 price and other terms of the bonds will be determined after the pricing of the offer.
Reporting by Abhirup Roy in San Francisco and Isla Binnie in New York; Editing by Leslie Adler and Chris Reese
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