Rivian Automotive, Inc. RIVN recently received approval for starting construction at its Georgia plant. The company said in a filing with the SEC that it would raise $15 billion in debt to aid the same.
What Happened: Rivian entered into three separate agreements with the Joint Development Authority of Jasper County, Morgan County, Newton County, and Walton County on Thursday, the electric vehicle startup said in the filing. These include a rental agreement, a bond purchase agreement, and an option agreement.
The rental agreement, which is to expire by Dec. 1, 2047, provides for Rivian to rent the JDA land in Morgan County and Walton County, Georgia, as well as buildings, machinery, and equipment for the operation of its EV manufacturing plant. The company has agreed to pay a minimum of approximately $300 million in property tax payments through 2047. The payment could increase if the investment Rivian committed to increases beyond $5 billion.
The JDA will issue on behalf of Rivian taxable revenue bonds in a maximum aggregate amount of up to $15 billion to fund the project costs, promote economic development and job creation, and facilitate a property tax incentive for the company. Rivian, in turn, has committed to spend more than $5 billion on the project or the amount of project bonds issued to develop the project.
The JDA has agreed to sell to the company the project bonds as they are issued.
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Why It’s Important: Rivian has earmarked the Georgia plant to manufacture its next-gen, affordable R2 EVs based on a new platform. The company aims to take on market leader Tesla, Inc. TSLA with the R2 models. Rivian’s R.J. Scaringe said on the third-quarter earnings calls that Tesla is left with a highly concentrated market share in the $45,000-$50,000 price category due to an “extreme vacuum of choice.”
Rivian announced a $1.5 billion convertible green note offering last month. The company said then it intends to use much of the net proceeds of $1.486 billion to finance, refinance, and make direct investments in current or future projects that qualify as “Green Projects.”
The Irvine, California-based company’s third-quarter earnings report released earlier this month showed cash and cash equivalents and short-term investments totaling $9.13 billion at the end of the September quarter.
Rivian ended Monday’s session 5.13% higher at $16.19, according to Benzinga Pro data.
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