Mystery investor helps Canoo raise cash


Canoo Technologies announced this week that it has entered into a purchase agreement with a foreign strategic institutional investor, for an investment of $45 million.

Canoo and the investor, described as an unnamed foreign strategic institutional investor, agreed to work together in good faith to negotiate one or more additional investments for up to $150 million, according to the press release made by the electric vehicle company with a still-developing manufacturing plant in Oklahoma City and a project under construction near Pryor. The closing and sale are expected to occur as promptly as practicable, subject to customary closing conditions.

“The capital raised through this convertible preferred stock supports Canoo’s mission and demonstrates our disciplined, milestone driven approach to capital is aligned with the phased manufacturing capacity ramp required to satisfy our customer demand,” declared Tony Aquila, Chairman, Investor, and CEO.

Under the purchase agreement, the investor agreed to purchase $45 million of Series B Cumulative Perpetual Redeemable Preferred Stock (“Preferred Stock”). The Preferred Stock ranks senior to the common stock. Each share of Preferred Stock has a stated value of $1,000 and dividends on the Preferred Stock may be paid in either cash, in kind or, at the option of the holders, in shares of common stock.

The company will pay dividends at an annual rate of 7.50% from the original issuance date through the fifth anniversary of the closing date.  After that date, the dividend rate will increase by 1.50%; provided, however, the maximum dividend rate on the Preferred Stock shall be capped at 12.0% per annum. The investor has the right, at its option, to convert its Preferred Stock into common stock at a conversion price of 120% of the average closing prices per share of the common stock over the preceding ten (10) trading days.  In connection with the purchase agreement, the company issued to the investor warrants to purchase 22.96 million shares of common stock.

Additional details regarding the terms are included in a Form 8-K filed by Canoo with the Securities and Exchange Commission. Subsequent tranches and terms are to be mutually agreed upon by the parties at a future date.

While Canoo did not identify the foreign company, a separate filing made on the same day with the Securities and Exchange Commission reflected an updated sales agreement made earlier in September with YA II PN, Ltd., a Cayman Islands exempt limited partnership.

The filing was a legal advisory from the Chicago law firm of Kirkland and Ellis, LLP.

Canoo’s announcement followed word last week that the company had started to make hires at its EV assembly plant along I-40 in west Oklahoma City.

Canoo is receiving state incentives to locate its EV operations in the state, but the Department of Commerce would not comment about this week’s cash-raising effort, according to the Journal Record.