GM Extends Option to Buy Back Its Former Lordstown Plant
LORDSTOWN, Ohio – General Motors has extended its option to repurchase its former Lordstown Complex, about eight months after it sold the sprawling plant to startup Lordstown Motors Corp.
Documents filed Monday with the Trumbull County Recorders office show that the parties agreed May 28 that GM has until Aug. 31 to decide whether to buy back the plant it sold to Lordstown Motors in November. The initial deal called for the option to expire May 30.
In December, The Business Journal revealed that GM had provided a $40 million mortgage to Lordstown Motors so it could purchase and retool the plant. The original option memorandum was filed and signed the same day as the loan.
GM has declined to comment on the terms of the sales agreement. A filing with the Trumbull County Auditor’s office shows Lordstown Motors paid $20 million for the giant facility.
Lordstown Motors plans to manufacture electric pickups and its first model, The Endurance, is scheduled to be unveiled at the plant June 25.
Yesterday LMC announced that Servpro, a network of 1,800 franchises that provide restoration services and biohazard remediation, has agreed to buy 1,200 Endurance pickups.
Production of the vehicle is expected to begin in the first quarter of next year, the company says.
“We understand LMC has had productive discussions with both customers and prospective investors, and we continue to support their efforts to begin building the Endurance pick up truck,” GM spokesman Jim Cain said in a statement. “The amendment to the memorandum of options does nothing more than provide record notice of the extension of some of the contractual rights that GM already has.”
The memorandum allows GM the option to “repurchase the transferred assets, which includes, without limitation, the real property,” according to documents.
Lordstown Motors has said it would need about $450 million to retrofit the plant and begin production of the vehicle.
Lordstown Motors’ CEO Steve Burns has said the company plans additional models, including a midsize pickup and an SUV. He said earlier that a second model should be released within a year after the Endurance is launched.
The Business Journal and ProPublica reported Monday that the state of Ohio may require GM to pay back tens of millions of dollars the company received in tax breaks. The state notified GM in March that is was in default of two tax-credit agreements it signed with the Ohio Development Services Agency in 2009 worth $60.3 million. The notification said it would recommend that GM repay the full amount.
Under the tax-credit agreements, GM was obliged to keep the Lordstown plant open at least until 2027. But last October GM opted to officially close and sell manufacturing complex after the automaker settled a 40-day strike with the United Auto Workers union.
GM replied in a letter dated April 3 that the state should forgive all or a substantial portion of its liability, citing a collapse in the small-car market as a major factor in the company’s decision to close Lordstown. The automaker also highlighted its other investments and operations in Ohio, its commitment to build a $2.3 billion battery-cell manufacturing plant next to its former Lordstown facility, and the sale of that plant to Lordstown Motors.
The automaker also emphasized the economic downturn brought on by the coronavirus pandemic as a reason why it shouldn’t repay the incentives.
“Cash preservation is critically important to General Motors to support a vigorous emergence from the economic and global health crisis,” GM’s letter states. “Based on the factors outlined in this letter, we respectfully request your assistance to help us drive towards a full recovery by choosing not to require repayment of all, or a significant portion of, the tax credits.”
Development Services spokesman Todd Walker said the Ohio Tax Credit Authority will make a final determination as to whether a refund of the tax credit is required, and if so, the amount. Development Services has not made a formal recommendation, he said, and the matter would be addressed at a future meeting of the tax authority.
Pictured at top: The former GM Lordstown complex, now operated by Lordstown Motors Corp., a startup that is raising capital to produce electric pickup trucks there.
Copyright 2024 The Business Journal, Youngstown, Ohio.
