Lordstown Motors Lands $400M Equity Deal

LORDSTOWN, Ohio — Electric vehicle manufacturer Lordstown Motors Corp. on Monday announced it’s entered into an equity purchase agreement worth up to $400 million with YA II PN, LTD.

The agreement allows YA, a hedge fund managed by Yorkville Advisors Global LP in Mountainside, N.J., to purchase up to 35,144,690 shares over three years, according to a regulatory filing submitted by the company. The equity stake constitutes 19.9% of outstanding Class A common stock. That cap could be raised per stockholder approval or the average price of applicable sales equals or exceeds $7.48 per share.

Lordstown Motors agreed to issue 371,287 shares of its Class A common stock to YA in exchange for its commitment to the purchase agreement. Under the deal, the company may direct YA to purchase additional amounts of its stock during the term of the deal. The net proceeds would be used by the company for “working capital and general corporate purposes,” according to the filing.

Shares of Lordstown Motors, which trades under the ticker symbol RIDE, bounced upward by 3.7% to $7.78 per unit following the announcement, reversing several days of losses last week.

The purchase agreement comes at a critical point for Lordstown Motors as the startup EV manufacturer prepares to launch its first product, the all-electric Endurance pickup, in late September.

On June 8, the company issued a going concern notice in its restated 2020 earnings report, warning that it might not have enough capital to continue in business through next year.

On June 13, Lordstown Motors founder and CEO Steve Burns resigned, as did its Chief Financial Officer, Julio Rodriguez. Angela Strand was appointed executive chairwoman of the company, while Becky Roof was named interim CFO.

The company or its executives also face legal challenges on several fronts, including 11 class-action lawsuits, an investigation by the U.S. Securities and Exchange Commission and a probe by the U.S. Department of Justice.

The two federal investigations are focused on Lordstown Motors’ merger with DiamondPeak Holdings Corp. and preorders of the Endurance. The company said in its regulatory filings that it is cooperating with the investigations.

Copyright 2021 The Business Journal, Youngstown, Ohio.