To survive, EV SPAC Canoo agrees to sell $52 million worth of stock

In order to raise the funds necessary to maintain its operations, Canoo has agreed to sell 50 million shares at a steep discount.

Unidentified investors will purchase 50 million new shares from Canoo for $1.05 per share, a 16% discount from the stock’s closing price on Friday. The warrants, which give investors the option to purchase up to 50 million more shares, will be sold along with the shares. One warrant is included with each share, and it can be exercised for $1.30 per share.

The company estimated that the offering’s total gross proceeds would be around $52.5 million.

Canoo has previously issued numerous cautions that it is running low on cash and will probably need to issue more shares to raise capital. Investors, however, rejected the move due to the discounted price and concern that it would dilute their existing holdings.

Shares of Canoo began trading on Monday at $1, down 20% from Friday’s closing price.

Canoo, which became publicly traded through the merger with a special purpose acquisition company, has had difficulty producing its EV, an eye-catching design that is reconfigurable and based on a “skateboard” architecture that houses the batteries and the electric drivetrain in a chassis underneath the vehicle’s cabin.

Canoo has claimed to have a sales pipeline of more than $1 billion, a sum that can largely be attributed to an agreement with Walmart to buy 4,500 units with an option to buy up to 10,000 units. The business has had trouble turning those sales into deliveries. Several recent quarters have revealed a pre-revenue company wasting money.

Only $6.8 million was available to Canoo at the end of the third quarter. The company stated that “general working capital purposes” would be served by the proceeds from the sale of these new shares.