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Without naming the investors, Canoo said it would sell 50 million new shares, together with warrants that allow the investors to have the option to buy up to an additional 50 million.
American automotive startup Canoo Inc (NASDAQ: GOEV) saw its shares drop during the early trading hours on Monday after the company announced plans to sell its shares at discounted prices. At the end of the day. The EV maker’s shares closed down 12.40% to $1.09, shedding over 10% in the last five days. As a matter of fact, Canoo stock has lost over 81% over the past year and plunged nearly 11% since the year started. It has also fallen more than 17% in the last three months.
Canoo Agrees to Offer Discounted Shares
In a press release, Canoo said it has entered into a “definitive agreement” to sell $52 million in discounted shares to institutional investors. Without naming the investors, Canoo said it would sell 50 million new shares, together with warrants that allow the investors to have the option to buy up to an additional 50 million. For each share, the buyers will pay $1.05, and each comes with a warrant with an exercise price of $1.30 per share. Canoo added:
“The warrants will have an exercise price of $1.30 per share, will be initially exercisable beginning six months following the date of issuance and will expire five years from the initial exercise date.”
The $1.05 per share price Canoo is offering under this deal is lower compared to the $1.25 it closed at on Friday. In other news, the agreement also means significant dilution to the current shareholders’ holdings as the company’s current outstanding share count of 356 million will increase by between 50 million to 100 million shares. Canoo said the discounted shares deal is subject to the satisfaction of customary closing conditions and is expected to happen on or about the 8th of February. Also, the company expects to realize approximately $52.5 million in gross proceeds while the net proceeds go into general working capital purposes.
Last November, Canoo spoke about raising funds by issuing new shares before the recent agreement on discounted shares. The company had about $6.8 million worth of cash at hand as of the end of Q3. Investors are waiting for the Q4 results, which are expected to be out later this month.
One of the EV maker’s creations is the Lifestyle, a minivan unveiled in 2019. The vehicle, also Canoo’s most popular product, has gained a lot of attention due to its outlook and multi-functionality. The Lifestyle Delivery Vehicle does not have a rear bench seat to create more space. The vehicle will be in four configurations: basic, premium, adventure, and delivery.