Foxconn invests $70 million in Lordstown Motors, new ‘EV program’

Global technology company Foxconn has announced that it will invest at least another $70 million and up to $170 million in total in electric vehicle startup Lordstown Motors. Foxconn’s $70 million investment in Lordstown common stock will help the company with its corporate strategy, while the two parties transition their previously announced $100 million joint venture into a preferred stock investment that will fund a “new electric vehicle program” being run within Lordstown Motors. In place.

Lordstown Motors Corp. ($RIDE) is an EV startup with a short but colorful history. The company quickly turned to the fences, as it prepared its first vehicle – the Endurance pickup truck. With over 100,000 reported bookings in place, there was plenty to be excited about initially.

However, Lordstown’s hype train started to slow after one of the Endurance prototypes caught fire in early 2021, quickly followed by a less than stellar performance at the San Felipe 250, due to incorrect fuel consumption estimates. pick-up energy.

In October 2021, the startup was circling its Ohio manufacturing facility in hopes that someone with more capital would come in and help build the Endurance EV. Chinese manufacturing expert Foxconn inevitably answered the call, completing the sale last May alongside the announcement of a $100 million investment in Lordstown Motors to form an electric vehicle joint venture.

As Endurance pickup trucks begin to roll off the assembly lines in Ohio, Foxconn has announced new investments in Lordstown Motors and is shifting some of those previously announced funds into stock to form a new electric vehicle development strategy.

Endurance EV pickups on the assembly line at Foxconn’s Lordstown, Ohio plant / Source: Foxconn

Foxconn ups the ante for Lordstown Motors to build new electric vehicles

According to a press release from Lordstown Motors Corp. (LMC) released today, Foxconn Ventures Pte. agreed to invest up to $170 million in the electric vehicle business in exchange for shares, board seats and other conditions. Here’s how the new deal breaks down.

Foxconn will make additional equity investments in LMC in the form of $70 million of its Class A common stock (par value $0.0001 per share) and up to $100 million of preferred stock newly created Series A convertible bonds (par value of $0.0001 per share). According to version:

Upon completion of the Investment Transactions, Foxconn is expected to own all of LMC’s outstanding preferred stock and 18.3% of its common stock on a pro forma basis, and will have the right to appoint two members of LMC’s board of directors. LMC.

Lordstown Motors has said it intends to use the proceeds from the sale of the common stock for “general corporate purposes”, while the proceeds from the sale of the preferred stock to Foxconn will fund development and design in the part of a “new program of electric vehicles”. The companies explained that the $100 million direct investment in Foxconn preferred stock will replace the joint venture’s $100 funding pledged earlier this year:

Termination of existing joint venture agreement: LMC and Foxconn have agreed to terminate the existing joint venture agreement between Lordstown EV Corporation and Foxconn EV Technology, Inc. The EV program and future vehicle development is expected to take place within LMC.

The deal is expected to reach an initial close around Nov. 22 and will include a number of terms such as voting and equity rights, as well as board representation for two Foxconn appointees. Lordstown’s Endurance pickup is set to go on sale before the end of the year and may soon be joined by other EV models under the new Foxconn-funded development program.

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