Struggling US electric pickup truck startup Lordstown Motors could be forced into bankruptcy as a result of a dispute with major shareholder and contract manufacturer Foxconn, according to media reports.
According to thedetroitbureau.com, the companies once high shares plunged on Monday morning (1 May) after the dispute was disclosed.
The report said Foxconn had decided to back out of a US$170 million investment deal after learning that Lordstown’s stock could be delisted from the Nasdaq exchange.
Without that financial package, Lordstown warned “there is substantial doubt regarding our ability to continue as a going concern.” It said without alternative funding it faced the prospect of having to file for bankruptcy, thedetroitbureau.com reported.
Launched in 2018, Lordstown Motors acquired a closed General Motors assembly plant in Lordstown, Ohio, with plans to produce BEV pickup trucks.
The report noted the startup had entered a SPAC-style reverse merger in October 2020 that allowed it to list on the Nasdaq exchange. Soon after, the company’s stock peaked around US$30 a share.
Lordstown subsequently agreed to a $230m deal giving Foxconn control of the company’s Ohio plant to build EVs.
Lordstown encountered setbacks, including the release of a study that found the automaker didn’t have the significant number of orders that it had claimed. CEO and co-founder Steve Burns was quickly forced out.
The Detroit Bureau report noted the confrontation appeared to have been triggered by Nasdaq advising the automaker it would be delisted because shares had fallen below $1 for more than 30 consecutive days.