Court OKs Burns Buying Lordstown Motors for $10.2M
LORDSTOWN, Ohio – It took less than 25 minutes Wednesday morning for U.S. Judge Mary F. Walrath to approve the sale of the remaining assets of Lordstown Motors Corp. to LAS Capital LLC.
Before the hearing began, attorneys had resolved all objections to the sale – and LAS Capital had agreed to amend its $10 million offer by $200,000 to account for assets at Lordstown’s engineering and product development offices in Irvine, California, and Farmington, Michigan.
The price increase came after LAS and Lordstown executives “walked through the list of assets at Irvine and Farmington,” said David M. Turetsky, attorney for Lordstown Motors.
Accordingly, a revised proposed sale order was filed early Wednesday morning. Included on the “clarified assets list” were office furniture, fixtures, hand tools and “installed information technology equipment” at the two offices.
Specifically identified at the California office and now being acquired by LAS is “the test bench with Endurance components used to simulate a road vehicle for testing purposes.”
LAS plans to assign its rights under the asset purchase agreement to LandX Motors Inc.
The majority owner of LAS Capital and LandX is Steve Burns, founder and former CEO of Lordstown Motors. Also involved in both entities is Julio Rodriquez, former CFO of Lordstown Motors.
“We have been transparent about their involvement,” Turetsky told Walrath.
Turetsky ticked off how all criteria have been met for court approval of the sale.
“This has been an extensive and vigorous sale process. … We cast a very wide net,” he said. “It was an open and comprehensive sale process. It was hard fought, and it was at arm’s length.”
As for a fair purchase price, Turetsky was blunt: “It was better than all other offers.”
The only issue Walrath raised during the hearing dealt with whether Burns, Rodriquez and other former Lordstown Motors directors and officers were being released from fraud claims alleged in the myriad shareholder lawsuits.
They are not, emphasized Turetsky, who referenced clarification paragraphs in the revised sale document.
Dan Guyder, who represents Foxconn, noted that LAS is buying heavy equipment scattered throughout the 600,000-square-foot plant in Lordstown that Foxconn owns.
“There is a fair amount of space and equipment that will require substantial effort to transition [to LAS],” Guyder said. “Foxconn remains available to assist in that process subject to reasonable limits.”
Separately, Foxconn and Lordstown Motors remain in limbo regarding the fraud complaint Lordstown filed against Foxconn on June 27, when the failed EV startup filed Chapter 11.
Foxconn filed a motion to dismiss the case Sept. 29. Extensions have been granted until Nov. 6 and Nov. 30 for Lordstown and Foxconn to file objections and responses.
Meanwhile, the U.S. Securities and Exchange Commission has until Nov. 10 to notify the court whether it will take action against Lordstown Motors.
The SEC says its investigation is continuing into whether the company and others “may have engaged in prepetition activities that violated the federal securities laws.”
If so, the SEC would be entitled to “disgorgement of ill-gotten gains and/or civil monetary penalties” – payment of which is not specifically carved out and set aside in the disclosure plan filed by Lordstown Motors.
The SEC opened its investigation in February 2021, when Burns and Rodriquez were still running Lordstown Motors.
Burns and Rodriquez resigned June 14, 2021.
Pictured at top: Steve Burns at a press event in 2020.
Copyright 2023 The Business Journal, Youngstown, Ohio.