Item 1.01 – Entry into a Material Definitive Agreement
As previously disclosed, Rivian Horizon, LLC, a subsidiary of Rivian Automotive, Inc. (the “Company”), the State of Georgia (the “State”) acting by and through the Georgia Department of Economic Development (the “GDEcD”), and the Joint Development Authority of Jasper County, Morgan County, Newton County and Walton County (the “JDA”, and together with the State and the GDEcD, the “Public Parties”) entered into an Economic Development Agreement, dated as of May 2, 2022 (as amended by the First Amendment dated September 26, 2023, the “EDA”), pursuant to which Rivian Horizon, LLC agreed to build an electric vehicle manufacturing plant in Georgia.
Pursuant to the EDA, on November 9, 2023, the Company entered into (i) a Rental Agreement (the “Rental Agreement”), (ii) a Bond Purchase Agreement (the “Bond Purchase Agreement”), and (iii) an Option Agreement (the “Option Agreement”), each with the JDA.
Pursuant to the Rental Agreement, the Company will rent from the JDA land in Morgan County and Walton County, Georgia, and buildings, machinery and equipment for the operation of the Company’s electric vehicle manufacturing plant (collectively, the “Project”).
Pursuant to the Rental Agreement and related Project agreements, including the Bond Purchase Agreement, the JDA agreed to issue its taxable revenue bonds in a maximum aggregate amount of up to $15.0 billion (the “Project Bonds”) to fund the costs of the Project to promote economic development and job creation, and to facilitate a property tax incentive for the Company, and the Company has agreed to acquire, construct, improve and install the Project, and to expend on the Project an amount the greater of $5.0 billion (the “Minimum Investment Commitment”) or the amount of the Project Bonds issued for the development of the Project. Pursuant to the Bond Purchase Agreement, the JDA has agreed to sell to the Company, and the Company has agreed to purchase from the JDA, the Project Bonds, as they are issued.
The term of the Rental Agreement expires on December 1, 2047, unless earlier terminated per the terms of the Rental Agreement.
Under the terms of the Rental Agreement, the Company, as tenant, enjoys use and occupancy of the Project, subject to certain requirements and restrictions. The Company, as tenant, will make rental payments under the Rental Agreement for the use of the Project in amounts sufficient to allow the JDA to pay the principal and interest on the Project Bonds as they are due to the Company, as purchaser and holder of the Project Bonds. Since the Company is both the tenant and bondholder, such principal and interest payments may be constructively made and may be deemed to be made when due.
As previously disclosed, the Company has agreed, in consideration of the Rental Agreement and other benefits, to make payments in lieu of taxes (the “PILOT Payments”) to the JDA annually during the term of the Rental Agreement. Per the EDA and Rental Agreement, the Company will pay the greater of scheduled PILOT Payments or property taxes payable on equipment and other personal property each year. The minimum annual scheduled PILOT Payments start at $1.5 million and gradually increase to $20.4 million by 2047, and the PILOT Payments are subject to further increases as set forth in the Rental Agreement if the Company exceeds its initial $5.0 billion Minimum Investment Commitment. Accordingly, the Company has agreed to pay a minimum of approximately $300.0 million in PILOT Payments or property tax payments over the course of the PILOT period.
The Rental Agreement contains events of default, including (a) failure by the Company to pay basic rent, additional rent or supplemental rent required under the Rental Agreement, (b) failure by the Company to make PILOT Payments, (c) an event of default under the related bond resolution of the JDA, and (d) the Company’s failure to observe or perform any other covenant or agreement contained in the Rental Agreement, each after applicable cure and notice periods.
