Following some last-minute drama, Churchill Capital IV (NYSE:CCIV) and Lucid Motors officially closed their merger on Friday. With the combination complete, the ticker symbol will change and start trading under "LCID" on Monday morning, just a day later than previously expected. Churchill Capital IV, the special-purpose acquisition company (SPAC) taking the nascent electric vehicle (EV) maker public, held its special shareholder meeting on Thursday but faced a minor setback.

Here's what investors need to know.

Exterior of a Lucid studio.

Image source: Lucid Motors.

Dilution confusion

There was some confusion among retail investors over one of the SPAC's proposals, which would amend the company's charter and authorize it to increase the total number of shares. This proposal was necessary in order to complete the transaction, but misinformation about it had been spreading on social media in recent months.

Some investors saw the move as highly dilutive based on misinterpretations of regulatory filings, which details a 2.61 exchange ratio of Churchill Capital IV shares to Lucid stock. But that only applies to the previous incarnation of Lucid and its investors, such as Saudi Arabia's Public Investment Fund and employees who received stock-based compensation. In other words, the exchange ratio is not particularly relevant to the SPAC's public investors, who incorrectly feared that excessive dilution could adversely impact the value of the investment.

The higher share authorization was also necessary to accommodate the shares being sold to institutional investors participating in the PIPE (private investment in public equity), which is actually bringing more money ($2.5 billion) to the table than the SPAC itself ($2.1 billion).

Additionally, Lucid will likely need to raise capital in a few years since entering the automotive industry is one of the most capital-intensive endeavors on the planet. Future capital raises will be dilutive, but the company will need that money to fund future growth.

Churchill Capital IV and Lucid extended the deadline for shareholders to vote, and executives pleaded with investors to vote in favor of all proposals in order to cross the finish line. Those efforts worked and the companies have sealed the deal.

"Lucid has further increased its momentum as we gear up to make the first customer deliveries of our Lucid Air lineup of electric sedans later this year," Lucid CEO Peter Rawlinson said in a statement. "We are making significant investments in the long-term growth and innovation of our company, and we will continue to bring to bear world-class technology to positively impact mankind's transition to sustainable mobility."

With the de-SPAC transaction closed, Lucid will receive approximately $4.4 billion (after transaction expenses) in cash from the SPAC merger and it can now focus on the final stretch ahead of its first customer deliveries. The company recently said that it now has over 10,000 vehicle reservations and has decided to accelerate its manufacturing plan due to strong demand.

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