Rivian cash crunch forces risky bond sale to fund R2 development

Rivian (NASDAQ: RIVN) is in a crunch for cash and is fighting supply and demand issues for its vehicles, and will sell $1.3 million in bonds to support the development of its next platform of vehicles, the R2.

Rivian made the announcement on Monday and said that initial investors will have the option to buy an additional $200 million of the bond for settlement 13 days after they are first issued.

Rivian spokespeople said to Reuters that the cash will help fund the launch of the R2 platform, which is set to be launched in 2025. Rivian CEO RJ Scaringe said that the company plans to build batteries domestically, which is an “important part” of the R2 platform’s launch.

It should be made clear that Rivian is not on the verge of closing its doors and that this move is how it plans to bring its more affordable platform to the market. Rivian has enough cash to fund its operations through 2025, and it said held $12.1 billion during its most recent earnings call.

The bonds will be “green,” meaning they raise funds for new and existing projects that deliver environmental benefits and provide a more sustainable economy, according to PWC. The bonds will mature in March 2029, giving investors the option to convert the bonds into either cash or additional Rivian shares.

Things like interest rate, conversion rate, and other terms are decided at the pricing of the offering.

Rivian shares tanked 12 percent by 11:35 AM EST, trading at $15.08. The company’s stock is down over 64 percent in the past year.

Rivian reported its earnings for Q4 and the Full Year 2022 on February 28, setting optimistic goals for its production this year. Rivian is gaming to reach 50,000 units of production in 2023, but its main focus will hone in on continuing to reach profitability by the end of 2024.

0 0 votes
Article Rating
Notify of
Inline Feedbacks
View all comments
Would love your thoughts, please comment.x