Rivian Automotive Inc., the Irvine-based maker of electric vehicles, is issuing $15 billion in bonds that “aren’t real,” according to Bloomberg News.
“The debt is structured as what’s known as ‘phantom bonds’ that are used by companies to get a property tax break in Georgia and involve no real financial or accounting impact for the company involved, according to a report by law firm Smith, Gambrell & Russell LLP,” the Bloomberg article said. “In Rivian’s case, it’s a workaround because the state doesn’t have legislation allowing for companies to get abatements that provide such relief.”
Rivian in a securities filing revealed it would issue $15 billion in bonds to fund a new campus in Georgia. Rivian said the project will create 7,500 jobs and produce as many as 400,000 vehicles annually.
The $15 billion bond if real would have been the largest ever muni sale and nearly the size of the company’s market cap, Bloomberg said.
“The whole concept is set up for a break on the ad-valorem taxes,” John Shakarjian, Rivian’s associate general counsel for real estate and construction, told Bloomberg in an interview. “There’s no cash changing hands, there’s no cash being generated, there’s no movement of money.”
Shares of Rivian rose 3.1% to $17.43 and a $16.7 billion market cap.