Lordstown Motors Combines with DiamondPeak Holdings; Gets $500M in Investments, $75M from GM
LORDSTOWN, Ohio – Lordstown Motors Corp. and DiamondPeak Holdings Corp., New York, this morning jointly announced they have entered into a definitive agreement for a business combination with “an implied $1.6 billion pro forma equity value.”
Diamond Peak Holdings is described as a special purpose acquisition company. Approximately $675 million of gross proceeds are expected from the transaction
The combination would result in Lordstown becoming a publicly listed company. Upon closing of the transaction, expected to occur in the fourth quarter, the combined company will be named Lordstown Motors Corp. and be listed on the NASDAQ and trade under the new ticker symbol, “RIDE,” the companies said.
The transaction includes a $500 million fully committed PIPE (private investment in public equity), which includes $75 million of investments by General Motors in addition to investments from institutional investors. Among them are Fidelity Management & Research Company LLC, Wellington Management Company LLP, Federated Hermes Kaufmann Small Cap Fund, and funds and accounts managed by BlackRock, among others, according to the news release.
The $75 million investment from General Motors includes certain in kind contributions that have already been provided to Lordstown, the companies said.
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.
On June 15, GM extended to Aug. 31 its option to repurchase the former Lordstown Complex. A filing with the Trumbull County Auditor’s office shows Lordstown Motors paid $20 million to buy the giant facility.
Lordstown Motors is believed to be one of the first electric vehicle manufacturers to acquire a near production ready plant. The complex provides flexibility and line-of-sight to production as well as immediate access to a well-trained and highly capable workforce thus positioning Lordstown to be first to market, the company says.
The merger, and the support of the company’s network of industry partners, will drive the development and commercialization of Lordstown’s all-electric pickup truck, the Lordstown Endurance, the news release stated.
Said Chairman and CEO David Hamamoto in a prepared statement, “We have evaluated hundreds of companies for more than a year and Lordstown stood out as a differentiated, high growth company at the confluence of electric vehicles and light-duty trucks, two highly valuable areas of focus and tremendous opportunity in the automotive sector. Lordstown’s top-tier management team, led by Steve Burns, has captured a clear lane of customers in the fleet market. The team’s vast experience and track-record in launching both traditional and electric vehicles, as well as the company’s strong strategic relationships, provides Lordstown with a unique competitive advantage and positions the company to achieve its milestone of commencing production of the Endurance in the second half of 2021.”
Harnamoto will serve on the combined company’s board of directors, along with Steve Burns, founder and CEO of Lordstown Motors.
Lordstown Motors unveiled the prototype of its flagship Endurance pickup truck June 25, and to date, has received more than 27,000 pre-orders for the vehicle representing over $1.4 billion of potential revenue, primarily from commercial fleet customers.
The Endurance’s use of an in-wheel hub motor design is expected to improve performance, efficiency, and safety, while providing a significant reduction in total cost of ownership, Burns states. Lordstown will be the only manufacturer of full-size electric pickup trucks focused exclusively on the large commercial fleet market and is expected to be the first to come to market with the innovative hub motor design.
“The Endurance was constructed from the ground up with simplicity in mind,” he says. “Equipped with hub motors in each wheel, and seamlessly integrated with our software system, we are effectively able to deliver a motor and mind in each wheel. Further, this design means that the Endurance has just four moving parts in the drivetrain, as compared to more than 2,000 in vehicles utilizing a traditional internal combustion engine. Together, this allows us to significantly increase reliability, maximize performance, and reduce total cost of ownership. Our streamlined and simplified design positions the Endurance to be one of the simplest and most cost effective vehicles on U.S. roads.”
The business combination values Lordstown at an implied $1.6 billion pro forma equity value, at the $10 per share PIPE price and assuming minimal redemptions by DiamondPeak stockholders.
The boards of directors of both DiamondPeak and Lordstown have unanimously approved the proposed transaction.It is subject to, among other things, the approval by DiamondPeak’s stockholders and satisfaction or waiver of the other conditions stated in the definitive documentation.
DiamondPeak is a special purpose acquisition company formed for the purpose of effecting a merger, stock exchange, acquisition, reorganization or similar business combination with one or more businesses.
DiamondPeak is sponsored by DiamondPeak Sponsor LLC, which is owned by affiliates of David T. Hamamoto and the principals of Silverpeak, an alternative investment management firm.
Goldman Sachs is the financial adviser and Sullivan & Cromwell LLP is the legal adviser to DiamondPeak. Goldman Sachs is the exclusive placement agent on the PIPE offering. Deutsche Bank is serving as additional capital markets adviser to DiamondPeak. BakerHostetler is serving as legal adviser to Lordstown.
Copyright 2022 The Business Journal, Youngstown, Ohio.