Foxconn to Invest $170M in Lordstown Motors
LORDSTOWN, Ohio – Foxconn plans to invest up to $170 million into Lordstown Motors Corp. in order to fund general expenses and develop a new electric-vehicle program, Lordstown Motors announced late Monday.
Under the agreement, Foxconn will purchase $70 million in Class A common stock and up to $100 million of a newly created Series A convertible preferred stock.
Upon completion of the investment transactions, Foxconn is expected to hold all of Lordtown Motors’ outstanding preferred stock and 18.3% of its common stock on a pro-forma basis, and will have the right to designate two members of Lordstown’s board of directors.
Lordstown Motors will use the proceeds from the sale of the common stock for general corporate purposes and the proceeds from the sale of the preferred stock to fund development and design activities for a new electric vehicle program in collaboration with Foxconn, the company said.
“Since announcing our first transaction with Foxconn more than a year ago, it has been our objective to develop a broad strategic partnership that leverages the capabilities of both companies,” said Lordstown Motors Executive Chairman Daniel Ninivaggi. “Foxconn’s latest investment is another step in that direction. Our board of directors and management team strongly believe that deep collaboration with the Foxconn EV ecosystem, including the Mobility-in-Harmony [MIH] open-source platform, offers tremendous opportunities to meet our mutual ambition to accelerate EV adoption globally.”
Lordstown Motors President and CEO Edward Hightower said the Foxconn and Lordstown have collaborated to bring the company’s first product, the all-electric Endurance pickup, into limited production.
“We acknowledge and appreciate the confidence in our team that is shown by this investment,” Hightower said. “The combination of LMC’s experienced vehicle development team, Foxconn’s growing EV ecosystem, the MIH platform, and our asset-light business model will allow us to bring great EVs to market faster and more efficiently.”
The $100 million direct preferred stock investment replaces the joint venture funding previously announced by Foxconn and Lordstown Motors.
The initial closing is expected to be held on or about Nov. 22, in which Foxconn will purchase an aggregate of approximately 12.9 million shares of common stock at a purchase price of $1.76 per share, resulting in total proceeds of $22.7 million, and 300,000 shares of preferred stock at a purchase price of $100 per share, resulting in total proceeds of $30 million.
The remaining shares of preferred stock will be purchased by Foxconn based on achieving certain EV program funding milestones to be agreed-upon by the parties.
In May, Foxconn purchased Lordstown Motors’ 6.2 million square-foot manufacturing plant for $230 million. The two companies also created a joint venture to develop new EV products and a contract manufacturing agreement to produce the Endurance pickup.
Copyright 2023 The Business Journal, Youngstown, Ohio.