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Lucid Group Sued by Dentons Firm Over De-SPAC Share Conversion

Aug. 4, 2021, 3:10 PM

Lucid Group Inc., the Saudi-backed electric vehicle maker that went public last month by merging with a blank-check company, was hit with a lawsuit in Delaware by Dentons US LLP, a white-shoe law firm claiming it was wrongly cut out of the deal.

The heavily redacted complaint, made public late Tuesday in Delaware Chancery Court, accuses Lucid of refusing to intervene in efforts by a Seychelles-based entity, Pisces Co., to sell or transfer Lucid shares encumbered by the law firm’s “financial and security interests.”

The suit also targets Pisces, which was allegedly formed by an unidentified party to hold the shares after Dentons gained certain unspecified rights in them through its work on an earlier court case. Those details are blacked out.

But securities filings submitted as exhibits appear to show Pisces is affiliated with Shanghai Qichengyueming Investment Partnership Enterprise, a Chinese company Dentons represented in litigation against Jia Yueting, the founder and ex-CEO of Faraday Future, another electric vehicle maker.

Lucid didn’t immediately respond to a request for comment Wednesday. Contact information for Pisces wasn’t available.

Lucid went public July 23, when the startup automaker—previously a privately held business known as Atieva Inc.—merged with Churchill Capital Corp. IV, a “special purpose acquisition company” sponsored by former Citigroup Inc. investment banking chief Michael Klein.

SPACs, or blank-check companies, are publicly traded entities that raise money on the promise of a merger, or “de-SPAC,” with a private business that can then access public markets without the scrutiny of an initial public offering. They exploded in popularity in 2020, leaving regulators to play catch-up.

The trend has allegedly been driven partly by Klein, who’s called a “serial sponsor of SPACs” in an earlier lawsuit challenging a de-SPAC between health analytics company MultiPlan Inc. and his Churchill Capital Corp. III. Klein has sponsored seven SPACs, the earlier suit says.

The complaint targeting Lucid and Pisces doesn’t name Klein or his affiliates as defendants. It was originally filed under seal July 29.

Publicly traded Lucid is 60% owned by Saudi Arabia’s sovereign wealth fund, which reportedly made $20 billion in the de-SPAC on an initial $2.5 billion investment.

Cause of Action: Sections 159, 167, 168, and 366 of the Delaware General Corporation Law.

Relief: An order seizing the relevant Lucid shares and another requiring Lucid to properly record Denton’s rights and block any transfer of the shares.

Attorneys: Dentons is represented by Young Conaway Stargatt & Taylor LLP.

The case is Dentons US LLP v. Lucid Grp. Inc., Del. Ch., No. 2021-0665, complaint unsealed 8/3/21.

To contact the reporter on this story: Mike Leonard in Washington at mleonard@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Patrick L. Gregory at pgregory@bloomberglaw.com

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