UPDATE: Lordstown Motors Continues To Work With Foxconn; Deadline For Deal Extended
LORDSTOWN, Ohio – Lordstown Motors Corp. says it continues to “work closely” with Foxconn, as a deadline to to reach purchase and contract manufacturing agreements is now extended to next week.
The deal was initially to close on April 30. However, the parties agreed April 29 to extend the deadline to May 14. Today, executives said on a conference call with analysts that the deadline has once again been pushed to May 18.
The company announced in November that it had signed an agreement with Foxconn that calls for Foxconn to purchase Lordstown’s plant for $230 million. However, the deal is contingent on the parties entering into contract manufacturing and joint venture agreements. These agreements are not yet finalized. Should the parties not reach an agreement, Lordstown Motors would be obligated to repay $200 million in down payments Foxconn has already provided the company toward the purchase of the plant.
The company has said it does not have the funds to repay Foxconn. This could potentially trigger Foxconn to foreclose on Lordstown Motors’ assets should the deal fall through.
Lordstown Motors reported Monday that it had an ending cash balance of $203.5 million and posted a net loss of $89.6 million for the three months ended March 31, 2022, as it continues to develop its first product, the all-electric Endurance pickup.
“We made significant progress toward launching the Endurance during the first quarter, notwithstanding unprecedented supply chain challenges,” said Daniel Ninibaggi, CEO of Lordstown Motors. “Our highest priority remains getting the Endurance into customers’ hands so they can experience the unique attributes of the truck themselves.”
“We also continue to work closely with Foxconn to close our pending transaction and strengthen our manufacturing and product development partnership,” he said.
Foxconn has paid one installment of $100 million and two installments of $50 million each toward the purchase of the plant. It has also purchased $50 million in equity at the company.
The purchase balance is due at closing.
Edward Hightower, President of Lordstown Motors, continued, “We cannot wait for more customers to experience the Endurance, as we expect that they will love it. The performance of the Endurance in testing to date has correlated well with the performance predicted by our computer aided engineering analyses.”
Still, the company reiterated that raising additional capital is critical to Lordstown’s survival.
“Our team members are incredibly committed and continue to work tirelessly to execute on our priorities,” said Adam Kroll, Chief Financial Officer of Lordstown. “We are managing through a tough macroeconomic environment, and we are focused on managing our liquidity as we bring the Endurance to launch. At the same time, we understand that raising additional capital is critical to our ability to achieve our business plan in 2022 and beyond.”
Copyright 2022 The Business Journal, Youngstown, Ohio.