Lordstown Motors shares plunged 48% Monday after main shareholder Foxconn alleged it breached their $170 million funding deal and the electrical truck maker warned it could be compelled to file for chapter.
Lordstown warned in a U.S. Securities and Change Fee submitting on Monday that “there’s substantial doubt relating to our skill to proceed as a going concern.” With no decision with Foxconn, different funding or new companions, it may very well be compelled to file for chapter or stop operations, it added.
Lordstown mentioned it was in talks with the Taiwanese contract producer to hunt a decision.
It rejected Foxconn’s allegation of a breach of its settlement, saying the declare was primarily based on a delisting discover Nasdaq had despatched the Ohio-based automaker. Lordstown mentioned final month the discover had no quick affect on its inventory itemizing and it had till Oct. 16 to regain compliance with Nasdaq’s guidelines.
“Foxconn’s actions are fully unwarranted. Their course of conduct has resulted in materials — and what’s changing into irreparable — hurt to the corporate,” Lordstown mentioned in a press release. “Within the absence of a well timed decision, we are going to take all actions needed to guard our enterprise pursuits and implement all of our rights and cures.”
Foxconn didn’t instantly reply to a request for remark.
Lordstown shares have been buying and selling mid-afternoon at 27 cents, down 25 cents.
Foxconn in November struck a deal to take a near-20% stake within the money-losing U.S. electrical truck maker for as much as $170 million.
In Could 2022, Lordstown accomplished a deal to promote its Ohio manufacturing unit for $230 million to Foxconn, excluding belongings such because the hub motor meeting and battery pack traces.
Lordstown mentioned Foxconn had balked at buying $47.3 million in inventory, which was alleged to happen quickly after the Committee on International Funding in the USA on April 25 concluded there have been no unresolved nationwide safety issues to the settlement.
Lordstown Motors purchased a former Normal Motors Co small automobile meeting plant and tools for $20 million in Ohio after the Detroit automaker closed it in March 2019.