Lordstown Motors files for bankruptcy, sues Foxconn over $170 million funding deal

Struggling electric-truck maker Lordstown Motors filed for Chapter 11 bankruptcy extortion connected Tuesday and said that it would enactment itself up for merchantability amid an ongoing quality implicit investments that had been promised by Taiwanese shaper Foxconn.

Shares were down implicit 60% successful premarket trading pursuing the news.

Simultaneously with its bankruptcy filing, Lordstown filed a suit against Foxconn. The institution accused Foxconn of fraud and of failing to abide by an statement that called for the Taiwan-based steadfast to put up to $170 cardinal successful Lordstown, and for the 2 to enactment unneurotic connected a scope of caller electrical vehicles.

In a connection provided to CNBC, Foxconn said it had hoped to proceed discussions to scope a solution that would "satisfy each stakeholders" without "resorting to baseless ineligible actions." But successful airy of the litigation and what it characterized arsenic Lordstown's attempts to "mislead the public," it is suspending talks and reserving the close to instrumentality ineligible enactment of its own.

Lordstown, launched successful 2019 with a mill acquired from General Motors and the enthusiastic enactment of the Trump administration, struck a woody to merchantability that Ohio mill to Foxconn for $230 cardinal past year. Following the deal, which closed successful May 2022, Lordstown and Foxconn  agreed to a 2nd woody successful which Foxconn would invest up to $170 million successful Lordstown, taking a 19.3% involvement successful the startup.

Foxconn paid the archetypal $52.7 cardinal owed nether that woody past year. The adjacent payment, of $47.3 million, was owed wrong 10 days of regulatory support by the Committee connected Foreign Investment successful the United States. That support was secured successful precocious April, Lordstown said – but Foxconn ne'er made the payment.

Instead, Foxconn told Lordstown that the startup had breached the deal by allowing its banal terms to autumn beneath $1 per share. (Lordstown executed a 1:15 reverse banal divided successful May, pushing its stock terms backmost implicit the captious $1 mark.)

In aboriginal May, Lordstown warned investors that a bankruptcy filing was likely if it didn't scope an statement with Foxconn oregon get further backing elsewhere. A fewer days later, Lordstown said that it was astir retired of currency and that it would beryllium forced to stop accumulation of its Endurance electrical pickup unless it could find a strategical partner.

Lordstown had conscionable $108.1 cardinal successful currency disposable astatine the extremity of March, aft losing $171.1 cardinal successful the archetypal quarter.