Zoomcar Announces Pricing of $9.15 million Private Placement

Rhea-AI Summary

Zoomcar (NASDAQ: ZCAR) has announced a $9.15 million private placement with institutional investors. The company will issue 2,137,850 units at $4.28 per unit, each consisting of one common stock share (or pre-funded warrant) and multiple warrants. $3.6 million of the proceeds will repay outstanding debt, with the remainder used for general corporate purposes. The placement includes Series A warrants exercisable at $4.03 per share and Series B warrants at $0.0001, both subject to stockholder approval. The closing is expected on November 6, 2024.

Positive

• Secured $9.15 million in new funding through private placement
• Will reduce debt burden by repaying $3.6 million of outstanding indebtedness

Negative

• Significant shareholder dilution through issuance of 2,137,850 units plus additional potential shares from warrants
• Complex warrant structure with potential for further dilution through reset provisions and adjustments

Insights

Financial Analyst

This $9.15 million private placement represents a significant dilutive financing event for Zoomcar. The structure is complex, combining common stock with multiple warrant series at varying exercise prices. Of particular concern is the $4.28 unit price and the Series A warrants' $4.03 exercise price, both subject to potential downward adjustments. The immediate use of $3.6 million for debt repayment leaves only $5.55 million for operations, which may not provide sufficient runway given the company's market cap of about $10 million.

The inclusion of Series B warrants with a $0.0001 exercise price and reset provisions signals potential significant future dilution. This financing structure suggests challenging market conditions for the company and could put downward pressure on the stock price. Investors should carefully monitor the impact of warrant exercises and potential reset events on share value.

BANGALORE, India, Nov. 6, 2024 /PRNewswire/ -- Zoomcar Holdings, Inc. ("Zoomcar" or the "Company") (NASDAQ: ZCAR), the Nasdaq-listed leading marketplace for self-drive car sharing, today announced the pricing of a private placement with certain institutional investors. The aggregate gross cash proceeds are expected to be $9.15 million, before deducting fees to the placement agent and other offering expenses payable by the Company. The Company intends to use the net proceeds from the private placement to repay approximately $3.6 million of outstanding indebtedness to certain institutional creditors and for general corporate purposes and working capital.

In connection with the private placement, the Company is planning to issue an aggregate of 2,137,850 units. Each unit will be sold at an effective unit price of $4.28 per unit and will consist 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 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 will 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, 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.

The closing of the private placement is expected to occur on or about November 6, 2024, subject to the satisfaction of certain customary closing conditions.

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

The securities described above are being 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.

Contact

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

Logo: https://mma.prnewswire.com/media/2517562/4938039/Zoomcar_Logo.jpg

 

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SOURCE Zoomcar Holdings, Inc.

FAQ

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

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

What is the unit price for Zoomcar's (ZCAR) November 2024 private placement?

Each unit in the private placement is priced at $4.28 and includes one common stock share (or pre-funded warrant) plus Series A and B warrants.

How will Zoomcar (ZCAR) use the proceeds from its November 2024 private placement?

Zoomcar will use $3.6 million to repay outstanding debt to institutional creditors, with the remainder for general corporate purposes and working capital.