Lordstown Motors, Foxconn Extend Deadline for Deal
LORDSTOWN, Ohio – The deadline to reach a final purchase and joint product development agreement between Lordstown Motors Corp. and Taiwan-based Foxconn has been extended to May 14, Lordstown Motors announced after the close of trading Friday.
Principals had initially set the closing date for Saturday, April 30.
Under the proposed agreement, Foxconn would purchase the Lordstown Motors plant for $230 million plus a $50 million equity investment. Thus far, Foxconn has made its $50 million equity purchase and has paid installments of $100 million, $50 million and another $50 million toward the acquisition of the plant.
The remaining balance is due at closing.
Should the deal fail to close by May 14 without another extension, Lordstown Motors would be obligated to repay Foxconn its down payments, the company said in announcing the extension. As it stands, Lordstown Motors does not have sufficient cash to do so, the company stated.
As a result, Foxconn could exercise its rights under the agreement and foreclose “on its liens on some or substantially all of the company’s assets. Under such circumstances, we would not be able to continue as a going concern or realize any value from our assets,” according to an earlier regulatory filing.
On April 9, 2022, the parties received clearance for the transactions from the Committee on Foreign Investment in the United States.
However, the entire deal is contingent upon the parties arriving at a contract manufacturing agreement. This contract calls for a financing structure that would allow Foxconn to manufacture the Lordstown Motors Endurance EV pickup – scheduled for limited production in September.
The manufacturing agreement would also include future Lordstown Motors products built with Foxconn’s mobility-in-harmony, or MIH, platform.
No deal has been reached pursuant to a joint venture agreement; discussions are ongoing, the company said.
Lordstown Motors said it expects to provide further updates regarding the status of the agreement and related transactions as part of its earnings announcement and conference call on May 9, 2022.
Lordstown Motors is looking for funding from Foxconn to help finance production of the Endurance and future Lordstown Motors models as part of the joint development agreement.
Shares of Lordstown Motors, which trades under the stock symbol, RIDE, slid 3.5% on Friday; closing at $2.18 per share. RIDE stock is down more than 37% for the month.
According to financial documents filed with regulators earlier this year, Lordstown Motors said the company requires “a joint product development agreement and an appropriate funding structure that enables us to raise substantial additional capital necessary to bring the Endurance into production and to fund future vehicle development.”
In February, Lordstown Motors executives said the company needed to raise approximately $250 million in the near-term to finance production of the Endurance. Lordstown Motors plans to produce just 500 trucks this year and another 2,500 in 2023.
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