Lordstown shares dive 23% as investor Foxconn alleges agreement breach
Lordstown Motors shares tumbled on Monday, closing 23% lower after major shareholder Foxconn alleged it breached their $170m (R3.1bn) investment deal and the electric truck maker warned it might be forced to file for bankruptcy.
Lordstown warned in a US Securities and Exchange Commission filing that “there is substantial doubt regarding our ability to continue as a going concern.” Without a resolution with Foxconn, other funding or new partners, it could be forced to file for bankruptcy or cease operations, it added.
Lordstown said it was in talks with the Taiwanese contract manufacturer to seek a resolution.
It rejected Foxconn's allegation of a breach of its agreement, saying the claim was based on a delisting notice Nasdaq had sent the Ohio-based carmaker. Lordstown said last month the notice had no immediate impact on its stock listing and it had until October 16 to regain compliance with Nasdaq's rules.
“Foxconn's actions are completely unwarranted. Their course of conduct has resulted in material — and what is becoming irreparable — harm to the company,” Lordstown said in a statement.
“In the absence of a timely resolution, we will take all actions necessary to protect our business interests and enforce all of our rights and remedies.”
Foxconn did not immediately respond to a request for comment.
Lordstown shares, which at one point tumbled more than 50% Monday, closed at 40c, down 12c in heavy trading. They were down 8% in after-hours trading.
Foxconn in November struck a deal to take a near-20% stake in the money-losing US electric truck maker for up to $170m.
In May 2022, Lordstown completed a deal to sell its Ohio factory for $230m (R4.2bn) to Foxconn, excluding assets such as the hub motor assembly and battery pack lines.
Lordstown said Foxconn balked at purchasing $47.3m (R868m) in stock, which was supposed to occur soon after the Committee on Foreign Investment in the US on April 25 concluded there were no unresolved national security concerns to the agreement.
Lordstown Motors bought a former General Motors small car assembly plant and equipment for $20m (R367m) in Ohio after the Detroit carmaker closed it in March 2019.