Rivian (RIVN) shares are sliding today as the EV maker announces plans to offer “green” debt.
Rivian said it plans to sell $1.3 billion worth of “green” premium convertible bonds by 2029, with the option to issue an additional $200 million in convertible bonds to initial buyers.
In keeping with Rivian’s ethos as a company (it’s a Climate commitment signatories and being the first to say they will not use deep-sea mining to produce batteries), they intend to use the funds raised for “green” or environmental purposes.
“Rivian intends to use the net proceeds from the offering to finance, refinance, directly invest, in whole or in part, one or more qualified or newly completed green projects…currently… and/or in the future,” the company said in a statement. These projects could include activities tied to clean transportation, renewable energy, the circular economy (i.e. battery/metal recycling), energy saving, and pollution prevention, Rivian says. infected.
Rivian says the green note offering meets the eligibility requirements as determined by “Green Bond Principles” of the International Capital Market Association instruct.
In its most recent earnings report, Rivian barely hit its production target for the year but reported an adjusted EBITDA loss of $5.22 billion. With the company forecasting another adjusted EBITDA loss of $4.3 billion for 2023, finding additional sources of funding should come as no surprise. Rivian reported that it had $12.01 billion in cash at the end of the fourth quarter and expects capital spending to hit $2 billion this year. Rivian is also in the process of developing its next plant in Georgia, where next-generation R2 vehicles will be built. Rivian says production of that vehicle will begin in 2026.
With a long wait for its next vehicle, Rivian’s cash position is a major focus for analysts and investors.
“We forecast a cash burn of $5.5 billion in 2023 thanks to operating limits. RIVN has targeted a 40% improvement in FCF by 2024 thanks to its goal of achieving a positive gross margin. We estimate RIVN will need to raise capital by the end of 2024,” Wells Fargo analyst Colin Langan wrote in a note a day after Rivian’s latest earnings release predicting the day’s capital raise announcement. Today. Langan currently has an Balanced rating on the stock with a target price of $18.
With questions still remaining about how many vehicles the company can produce by 2023, Rivian’s recent stock volatility could be routine without further evidence of manufacturing profitability and innovations. cash preservation ant.
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Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and more Instagram.
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