Chijet Motor Stock Plummets 59% on Discounted Share Offering
The EV maker announced an $8.0 million public offering priced at a steep discount, raising significant shareholder dilution concerns.
Shares of Chijet Motor Company (NASDAQ: CJET) plummeted nearly 59% in recent trading after the electric vehicle manufacturer announced the pricing of a public offering at a significant discount. The move has amplified investor concerns regarding the company's financial health and the potential for substantial shareholder dilution.
The company, which produces both traditional and new energy vehicles, of 13,560,000 Class A ordinary shares and an equal number of warrants at a combined price of $0.59 per share. This price represented a staggering , signaling significant challenges in raising capital.
The offering, managed by Maxim Group LLC as the sole placement agent, is expected to generate gross proceeds of approximately $8.0 million. The warrants are immediately exercisable at $0.59, hold a five-year term, and include a 'zero cash exercise' option, allowing holders to exchange a warrant for two Class A ordinary shares, further increasing the potential for dilution.
, Chijet intends to use the net proceeds for a range of purposes, including business acquisitions, corporate management, talent recruitment, and for general working capital. The capital raise comes at a critical time, as the company is reportedly operating with a low current ratio and significant cash burn.
The aggressive terms of the offering, particularly the heavily discounted price and the favorable warrant conditions, suggest the company may be facing financial pressure. For existing investors, the influx of 13.56 million new shares—and the potential for millions more from the warrants—represents a major dilution of their equity stake in the China-based automaker.