Zoomcar Announces Closing of $9.15 million Private Placement

Rhea-AI Summary

Zoomcar Holdings (NASDAQ: ZCAR) has closed a $9.15 million private placement with institutional investors, including a $2.5 million investment from a company director. The company used $3.8 million to repay existing debt and will use the remainder for general corporate purposes. The placement involved issuing 2,137,850 units at $4.28 per unit, each consisting of common stock (or pre-funded warrant) and multiple warrants. The Series A warrants, exercisable at $4.03 per share, could result in up to 4,275,700 additional shares. Aegis Capital Corp. served as the exclusive placement agent.

Positive

• Raised $9.15 million in gross proceeds through private placement
• Reduced outstanding debt by $3.8 million
• Secured $2.5 million investment from company director showing insider confidence

Negative

• Significant potential dilution through warrant issuance of up to 4,275,700 additional shares
• Complex warrant structure with adjustable exercise prices indicates challenging financing terms
• Need for immediate debt repayment ($3.8M) reduces available working capital from raised funds

Insights

Financial Analyst

This $9.15 million private placement represents a complex financial maneuver with significant dilution risk. The deal structure includes multiple warrant components at varying exercise prices, with $3.8 million immediately allocated to debt repayment. The effective unit price of $4.28 and initial Series A warrant exercise price of $4.03 are concerning given potential downward price adjustments and the low $0.806 floor price.

The inclusion of Series B warrants with a nominal $0.0001 exercise price and reset provisions signals substantial future dilution potential. The director's $2.5 million participation, while showing insider confidence, represents only 27% of the raise. This financing, while providing short-term working capital, comes with significant strings attached and could pressure share prices through dilution mechanisms.

BANGALORE, India, Nov. 7, 2024 /PRNewswire/ -- Zoomcar Holdings, Inc. ("Zoomcar" or the "Company") (NASDAQ: ZCAR), the Nasdaq-listed leading marketplace for self-drive car sharing, today announced the closing of a private placement with certain institutional investors. The aggregate gross cash proceeds were $9.15 million, before deducting fees to the placement agent and other offering expenses payable by the Company, and includes a $2.5 million investment by one of the Company's directors. The Company used the net proceeds from the private placement to repay approximately $3.8 million of outstanding indebtedness to certain institutional investors and intends to use the remainder for general corporate purposes and working capital.

In connection with the private placement, the Company issued an aggregate of 2,137,850 units. Each unit was sold at an effective unit price of $4.28 per unit and consisted of one share of common stock (or one pre-funded warrant in lieu thereof), two (2) Series A warrants, each exercisable for one share of common stock at an initial exercise price of $4.03 per share and resulting in the issuance of Series A warrants exercisable for an aggregate of up to 4,275,700 shares common stock, and one Series B warrant at an exercise price of $0.0001 to purchase such number of shares of common stock as will be determined on the Reset Date (as defined in the Series B warrant). The Series A warrants and the Series B warrants are exercisable beginning on the date that Stockholder Approval (as defined in the Series A warrant) is obtained. The Series A warrants have a term of 5 years and the Series B warrants are exercisable until exercised in full. The exercise price and number of shares of common stock issuable upon exercise of the Series A warrants are subject to adjustment on the Reset Date, upon future dilutive issuances and following reverse stock splits, in each case, subject to a floor of $0.806, and the exercise price and number of shares of common stock issuable upon exercise of the Series B warrants are subject to adjustment upon reverse stock splits, subject to a floor, and in each case, as will be described in more detail in the Current Report on Form 8-K to be filed in connection with the private placement.

Aegis Capital Corp. acted as the Exclusive Placement Agent for the private placement.

The securities described above were sold in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended (the "Act"), and have not been registered under the Act, or applicable state securities laws. Accordingly, the securities may not be offered or sold in the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Act and such applicable state securities laws. Pursuant to a registration rights agreement with the investors, the Company has agreed to file one or more registration statements with the Securities and Exchange Commission (the "SEC") covering the resale of the common stock sold in the private placement and the common stock issuable upon exercise of the pre-funded warrants and the warrants sold in the private placement.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any of the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About Zoomcar

Founded in 2013 and headquartered in Bengaluru, India, Zoomcar is a leading marketplace for car sharing focused in India. The Zoomcar community connects Hosts with Guests, who choose from a selection of cars for use at affordable prices, promoting sustainable, smart transportation solutions in India.

Safe Harbor Statement

This press release contains, or may contain, among other things, certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve significant risks and uncertainties. Such statements include, without limitation, statements related to the closing of this offering, the exercise of the warrants and receipt the proceeds therefrom, the ability for the Company to utilize the financing to fund operations and other statements identified by words such as "projects," "may," "will," "could," "would," "should," "believes," "expects," "anticipates," "estimates," "intends," "plans," "potential" or similar expressions. These statements are based upon the current beliefs and expectations of the Company's management and are subject to significant risks and uncertainties, including, but not limited, to market conditions and those other risks detailed in the Company's filings with the Securities and Exchange Commission. Actual results and timing may differ significantly from those set forth or implied in the forward-looking statements. Forward-looking statements involve certain risks and uncertainties that are subject to change based on various factors (many of which are beyond the Company's control). The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future presentations or otherwise, except as required by applicable law.

Press Contact:

• Akarshit Gulati: akarshitg@avianwe.com
• Bhagyashree Rewatkar: bhagyashree.rewatkar@zoomcar.com

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SOURCE Zoomcar

FAQ

How much did Zoomcar (ZCAR) raise in its November 2024 private placement?

Zoomcar raised $9.15 million in gross proceeds through a private placement with institutional investors.

What was the unit price in Zoomcar's (ZCAR) 2024 private placement?

Each unit was sold at $4.28 and included one share of common stock (or pre-funded warrant) plus Series A and B warrants.

How did Zoomcar (ZCAR) use the proceeds from its private placement?

Zoomcar used $3.8 million to repay outstanding debt to institutional investors, with the remainder allocated for general corporate purposes and working capital.

How many Series A warrants were issued in Zoomcar's (ZCAR) private placement?

The placement included Series A warrants exercisable for up to 4,275,700 shares of common stock at an initial exercise price of $4.03 per share.