Lordstown Motor’s prototype burnt down to the ground in it’s first few minutes of operation, it’s now known as the good old days.
The company’s financial future hangs on a deal it struck last September to sell its Ohio factory to Taiwanese contract manufacturer Hon Hai Technology Group, better known as Foxconn. Under the deal’s terms, it must close by May 18. (The original terms required the deal to close by May 14, but the parties agreed to a four-day extension, Lordstown said Monday.)
If the deal doesn’t happen – as of Tuesday morning, it wasn’t done – Lordstown will be required to refund the $250 million in down payments made by Foxconn over the last several months.
A refund would deplete nearly all of the aspiring truck maker’s remaining cash. Lordstown had $203.6 million in cash as of March 31 and received an additional $50 million from Foxconn in April. Nearly all of that will have to be repaid if the deal doesn’t happen.
If the deal gets done, Lordstown Motors will receive $30 million as final payment of the Lordstown plant, plus another $27 million for other costs.
Lordstown Motor’s Chief Financial Officer Adam Kroll said even with the $57 million, they would still have to raise another $150 million to get their pickup into production. The goal is for 500 pickups to be built this year. LMC acknowledges it will lose money on everyone of those pickups.
If a deal isn’t in place by May 18, Lordstown Motors would have to refund $200 million in down payments Foxconn made unless the deadline is extended.
It’s money Lordstown Motors doesn’t have, according to a regulatory filing Monday of the company’s first quarter financial results, and could result in Foxconn closing on liens on some or most of the electric-vehicle startup’s assets.
Under that scenario, Lordstown Motors likely would go out of business.
The Youngstow Vindicator
“Don’t move. Don’t sell your house,” – Trump at a 2017 Youngstown rally.
◾️In 2019 Lordstown Motors purchased GM’s Lordstown Assembly plant for $20 million, as part of the deal GM loaned LMC $50 million.
◾️Two years later, LMC agreed to sell the plant to Foxconn for $230 million.
◾️In September LMC (RIDE) stock hit a high of $31.80. Today, the stock is at $1.70 after bottoming out at $1.55 earlier today.,
◾️LMC is under investigation by the SEC, as well as the DOJ.
◾️The GM plant once employed over 13,000. It now employs around 500.
◾️The beginning of a series of bad events for Lordstown Motors started on January 13, 2021 when the prototype of the Endurance pickup ominously caught fire and was totally destroyed in it’s first ten minutes of operation.
◾️The Endurance pickup was entered in the San Felipe 250 Race in Baja California on April 17. It completed less than 40 miles of the 280-mile race before having to withdraw crying no mas.
This is a follow-up to several discussions, including this one, The Hits Just Keep Coming, that lists many of LMC’s problems.
