LMC to Provide Information on Foxconn Agreement | News, Sports, Jobs
LORDSTOWN – Lordstown Motors Corp. will inform its shareholders and the public on May 9 of the agreement it has reached with Taiwanese electronics assembler and tech giant Foxconn to buy the electric vehicle startup’s assembly plant.
The companies were aiming today to put in place the final asset purchase agreement and the agreements to manufacture affiliate contracts and joint products, but, according to a statement sent after markets closed on Friday, extended the deadline to solidify the agreements until May 14.
The proposed deal calls for Foxconn to buy the 6.2 million square foot factory and surrounding land for $230 million and make a capital investment of $50 million, which the company did in september.
Also so far, Foxconn has made $100 million in installments on Nov. 18; $50 million on January 28; and $50 million on April 15. The balance is due at closing.
The transaction authorized the Committee on Foreign Investment in the United States, which is part of the United States Treasury that reviews certain transactions involving foreign investment in the United States to determine their effect on national security.
The asset purchase agreement is based on entering into a contract manufacturing agreement for Lordstown Motors’ flagship vehicle, the Endurance. The deal, Lordstown Motors officials said in February, is a condition of completing the sale of the plant.
The parties also agreed last year to pursue a joint product development agreement to co-design and develop future vehicles based on Foxconn’s Mobility in Harmony (MIH) platform.
This latest deal is vital for Lordstown Motors to raise the extra millions needed to launch the Endurance this year, company officials also said in February. This amount is approximately $250 million. Limited production of the truck is expected to begin in September.
Under the asset purchase agreement, if the transactions are not completed by May 14, Lordstown Motors is obligated to repay the installments to Foxconn by then, unless the repayment deadline fails. be extended.
Lordstown Motors has given Foxconn a first ranking security interest in substantially all of its assets to secure the repayment obligation and “does not currently have sufficient cash to repay the installments before the repayment deadline”, states of release.
According to a regulatory filing in February, Foxconn can seize its liens on some of Lordstown Motors’ assets. In this scenario, Lordstown Motors “would probably not be able to continue in business or realize any value from our assets”, filing states.
The company will also release its first-quarter financial results on May 9 before the market opens. The press release will be followed by a conference call.
Lordstown Motors shares fell 3.5% on Friday to close at $2.18.