Lordstown stock fell 23% as investor Foxconn alleged breach of agreement

May 1 (Reuters) – Shares of Lordstown Motors fell on Monday, closing 23 percent lower, after major shareholder Foxconn claimed it breached a $170 million investment deal and warned the electric truck maker it may have to file for bankruptcy.

“There is material doubt as to our ability to continue as a going concern,” Lordstown warned in the SEC filing. She added that without a solution with Foxconn, other financing or new partners, it may be forced to file for bankruptcy or cease its operations.

Lordstown said it was in talks with the Taiwanese contract manufacturer to find a solution.

It dismissed Foxconn’s allegations that it breached its agreement, saying the allegation was based on a notice of delisting sent by Nasdaq to the Ohio-based automaker. Lordstown said last month that the notice had no immediate effect on the listing of its shares and that it had until Oct. 16 to restore compliance with Nasdaq rules.

“Foxconn’s actions are completely unjustifiable,” Lordstown said in a statement. “Foxconn’s behavior has caused material – and irreparable – damage to the company.”

“In the absence of a timely resolution, we will take all necessary measures to protect our business interests and enforce all of our rights and remedies.”

Foxconn did not immediately respond to a request for comment.

Shares of Lordstown, which at one point fell more than 50% on Monday, closed at 40 cents, down 12 cents in heavy trading. They are down 8% in after-hours trading.

Foxconn in November struck a deal to buy a nearly 20% stake in the money-losing US electric truck maker for $170 million.

In May 2022, Lordstown completed a deal to sell its Ohio plant for $230 million to Foxconn, excluding assets such as the hub motor assembly and battery pack lines.

Lordstown said Foxconn refused to buy $47.3 million worth of stock, which was supposed to happen shortly after the Committee on Foreign Investment in the United States concluded on April 25 that there were no national security concerns about the agreement.

Lordstown Motors bought General Motors’ former small car assembly plant and equipment for $20 million in Ohio after the Detroit automaker closed it in March 2019.

Additional reporting by Tyachi Datta in Bengaluru; Editing by Anil D’Silva

Our Standards: The Thomson Reuters Trust Principles.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top