Former Lordstown Motors CEO Continues Stock Sell-Off
LORDSTOWN, Ohio – The founder and former CEO of Lordstown Motors Corp. has unloaded more than $2.4 million worth of company stock over the past two months as the electric-vehicle manufacturer struggles to stay alive.
According to a filing with the U.S. Securities and Exchange Commission on Friday, former CEO Steve Burns cashed in $2,435,000 worth of Lordstown Motors stock between March 8 and May 2, just as the EV company’s share value plummeted under $1.
That equates to 4.974 million shares of Lordstown Motors stock, the filing shows. The stock sales were spread out over 24 separate transactions, most of which were in increments of 100,000 units.
In total, Burns has sold more than $61 million worth of Lordstown Motors stock, which trades under the ticker RIDE, since November 2021. He still holds 16,802,953 shares – or 7% – of Lordstown Motors common stock, the filing shows.
Lordstown Motors’ share price closed at 34 cents Friday. The stock has lost 82.4% of its value over the past year.
Burns, who founded the company in 2019, resigned in June 2021 after an internal investigation found that Lordstown Motors executives misled the public and exaggerated the number of preorders for the Endurance, the all-electric pickup that is in limited production at Foxconn’s plant here.
The most recent sale drew far less return than Burns’ previous sell-offs, records show.
Burns sold shares in January at an average of 87 cents per unit, then an all-time low price for the company’s stock, according to documents filed with the U.S. Securities and Exchange Commission. Burns netted approximately $4.35 million from the sell-off.
In November, the former CEO cashed in Lordstown Motors stock in multiple transactions. Records show that Burns sold 3.9 million shares worth $7 million on Nov. 11, 14 and 15. Less than a week earlier, Burns cashed in 4.75 million shares worth $9.2 million.
Burns began to shed RIDE stock in November 2021. Under an agreement with the company, half of his stock holdings were locked until October 2021, and the other half until October 2022.
Burns established Lordstown Motors in 2019 and helped the company acquire the former General Motors Lordstown plant to produce what he then deemed would be the first all-electric pickup for the commercial market, the Endurance.
The company went public via a special purpose acquisition company, or SPAC, in October 2020.
However, a short-seller report in March 2021 alleged that Lordstown Motors’ “preorders” for the Endurance were fabricated. The allegations led to an investigation by the SEC and the U.S. Department of Justice, which are still ongoing.
After Burns’ resignation, new leadership assumed control at Lordstown and spearheaded the sale of the plant to Foxconn for $230 million in May 2022. That deal also came with a contract manufacturing agreement where Foxconn would produce the Endurance, as well as an investment deal in which Foxconn pledged to invest $170 million into Lordstown’s operations.
That deal appears to be in jeopardy, as Foxconn has informed Lordstown Motors that it does not intend to close on a $47.3 million equity purchase by a May 8 deadline.
Foxconn said Lordstown Motors is in breach of the investment agreement because the embattled company received a delisting notice from Nasdaq, citing that Lordstown’s stock had failed to meet the exchange’s minimum bid requirement of $1 over 30 consecutive business days.
Lordstown Motors said in a filing this week that the parties were at an “impasse” regarding the investment deal, and the company would consider bankruptcy as an option should it fail to secure new investment from Foxconn.
Pictured at top: Steve Burns, founder and former CEO of Lordstown Motors Corp.
Copyright 2023 The Business Journal, Youngstown, Ohio.