LORDSTOWN — Lordstown Motors Corp. and Foxconn on Tuesday closed, as scheduled, the first round of a $170 million equity investment that the Taiwanese tech and electronics giant is turning into an electric vehicle startup.
However, the news did little to stem the slide in Lordstown Motors shares.
Regulatory documents show Lordstown Motors completed the transaction worth approximately $52.7 million, the proceeds of which Lordstown Motors will use to run the company and begin a new electric vehicle development program with Foxconn.
The initial closing is for approximately 12.9 million common shares at $1.76 per share and 300,000 preferred shares at $100 per share.
The deal, announced earlier this month, also calls for a second closing of about 26.8 million more common shares at $1.76 per share, with a value of about $47.2 million, after Committee approval. of Foreign Investments of the United States, which reviews certain transactions. involving foreign investment in the US to determine their effect on national security.
Also, “upon the satisfaction of certain milestones related to pre-development and design activities” of the new joint EV program, Foxconn has agreed to buy up to an additional 700,000 shares of preferred stock at $100 per share, according to Tuesday’s filing with the US Securities and Exchange Commission.
Proceeds from the sale of common shares will be used “for general corporate purposes” and proceeds from the sale of preferred shares “to finance development and design activities” for the EV program, which replaces a previously announced joint venture to co-design electric vehicles.
“Foxconn’s additional investment in LMC is a strong sign of confidence in our team’s engineering and product development capabilities and will help accelerate both companies’ EV ambitions.” the company stated on November 8 in its third-quarter financial results release.
Still, the news had little impact on shares of Lordstown Motors, which were trading at $1.34 a share on Tuesday morning. The shares hit a record low of $1.31 per share shortly after the market opened at 9 am. It closed at $1.33 per share.
The company’s shares, which trade under the symbol RIDE on the Nasdaq stock exchange, have lost nearly 21 percent of their value in the past five days.
Foxconn acquired the Lordstown Motors factory in Lordstown, the former General Motors small car assembly plant, for $230 million in May. Part of the deal was for Foxconn, the world’s largest contract electronics manufacturer, to assemble the company’s first EV vehicle, the Lordstown Motors Endurance truck.
Production of the truck has started, but in limited numbers and the company announced earlier this month that production estimates for 2022 were lower than previously anticipated.
The company is at the Los Angeles Auto Show with the truck, which is a finalist for North American Truck of the Year.