Airline Lilium to be released through SPAC contract with former GM executive

Lilium Jet, a five-seater air taxi from Lilium, can be seen flying over an airfield in southern Germany in a new video released by the company.


German aviation startup Lilium has agreed to open to the public through a merger with Kel Acquisition Corporation, a special purpose acquisition company founded by former General Motors executive Barry Engle.

This is the latest deal for the urban aviation mobility industry after the announcement of SPAC contracts such as Archer Aviation and Joby Aviation. SPAC is a blank check company established as an alternative to an IPO because it raises funds to buy something but does not have its own business. They have no non-cash assets and are traded on the stock exchange before merging with a private sector.

The deal, announced by authorities on Tuesday, means that the merged company will have a proformer corporate value of $ 2.4 billion and a proforma stock value of $ 3.3 billion. The merged company will receive approximately $ 830 million from the transaction, including $ 450 million from a fully committed common stock PIPE offering and $ 380 million in cash held in trust. Is expected.

The transaction is expected to close in the second quarter, at which point the merged company will be traded on the Nasdaq Exchange under LILM.

Lilium CEO and co-founder Daniel Weegand said the funding should provide the company with sufficient capital to reach its targeted commercial launches in the United States and Europe from 2024. Stated. He said the company had previously raised $ 400 million.

“This not only gives Barry and his team a lot of expertise and operational knowledge, but also the funding to achieve this kind of certification and market entry on our planes.” Mr. Weegand told CNBC. “This is a very big and important step for us as a company.”

Lilium is developing a 7-seater electric vertical take-off and landing aircraft. Some have characterized eVTOL as an electric air taxi or a “flying car.” The company will focus primarily on intercity flights rather than short city trips discussed by other companies. Its target launch markets are Florida and Germany.

Engle, who was responsible for GM’s North American operations before leaving the company in August, described Lilium’s products as “highly designed aircraft.” He said unique technology and a team built by Weegand, including Airbus board member and former CEO Tom Enders, are the main reasons for seeking a deal.

“It’s the team that knows what they’re doing and can actually do what’s certainly a very bold and ambitious agenda,” Engle said. “We did our homework, we did a lot of due diligence, and we couldn’t be more pleased and proud to give this our name.”

According to Engle and Wiegand, Lilium will begin to make money in 2024 and will achieve pre-tax adjusted profits in 2025. The company expects revenue of $ 3.3 billion by 2026 and close to $ 5.9 billion by 2027.

SPAC has become an increasingly popular way for businesses, especially pre-revenue start-ups, to publish in the past year. They were almost guaranteed to pop on the first day they became a publicly traded company, but nothing more. According to data from University of Florida finance professor Jay Ritter, US SPAC first-day returns fell from 5.4% in February and 6.1% in January to almost zero in March.

Engle and Wiegand said they were not worried about the short-term volatility and performance of equities. This has fallen about 13% for Qell since Bloomberg News reported on March 3 that it was in talks to merge SPAC and Lilium.

“I think this is a test of time,” Engle said. “A little short-term volatility isn’t something we worry about. We’re building a business here that literally grows for decades. In the process, good markets and bad. There are both markets, but this will bear. “

JP Morgan Securities and Barclays serve as Kel’s financial and capital markets advisors. Citi is Lilium’s exclusive financial adviser. The three financial institutions act as lead placement agents for PIPE transactions.

PIPE investors include Baillie Gifford, BlackRock, Tencent and Ferrovial.

— CNBC Yun Lee Contributed to this report.

Airline Lilium to be released through SPAC contract with former GM executive

Source link Airline Lilium to be released through SPAC contract with former GM executive

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