Lordstown Motors Evaluates Strategic Partners in Seeking Funding

LORDSTOWN, Ohio (Reuters) – Electric vehicle startup Lordstown Motors Corp. is evaluating strategic partners as part of its search for funding needed to stay in business, the company’s executive chairman Angela Strand said on Monday.

Lordstown Motors warned earlier this month that it may not be able to continue as a continuity if it can’t raise more money to convert its factory in Lordstown, Ohio, to large-scale production.

Shares of the company were down 5% in the late afternoon on Monday and are down 49% for the year so far.

Strand heads the company as the board of directors searches for a replacement for former Chief Executive Officer Steve Burns, who left the company earlier this month. She did not provide details on the evaluation of strategic partners.

Since the continuity warning, the company has tried to allay the concerns by saying it was in talks with multiple parties to raise funds. Strand said Monday that the company is also continuing our due diligence in pursuing a loan from the U.S. Department of Energy. Burns said the company was seeking a $200 million loan from Energy Department’s Advanced Technology Vehicles Manufacturing loan program in 2020.

Before his departure, Burns said on a conference call that Lordstown needed more capital and that production of the Endurance truck this year would be half of the 2,200 vehicles previously expected.

Lordstown Motors executives on Monday opened the assembly plant, a former General Motors Co. auto plant, to investors and reporters.

Lordstown, which went public through a reverse merger with a special acquisition company (SPAC) last year, is grappling with the launch of its Endurance pickup and questions about governance.

Several EV startups have gone public in the past year through mergers with SPACs, bypassing the tight scrutiny of a traditional IPO process.

In March, Lordstowns shares plunged after investment research firm Hindenburg Research announced it was taking a short position in the stock after the company misled consumers and investors about pre-orders for the Endurance truck that Lordstown initially said would cost $1. worth .4 billion.

The Ohio company then said the orders were non-binding and on June 8, when it warned it was out of cash, it revealed in a regulatory filing that it had no binding orders or commitments from customers.

A week ago, just days after Lordstown said it might not have enough money to stay in business for the next year, CEO Burns – who was also the company’s founder and largest shareholder – resigned, as did its chief financial officer. . Lordstown also acknowledged that it had overestimated the quality of pre-orders.

The next day, Lordstown president Rich Schmidt said the automaker had binding orders, but the company subsequently retracted that comment.

The U.S. Securities and Exchange Commission has asked the company for information regarding its truck preorders.

The Wall Street Journal reported Monday that senior executives of Lordstown Motors had sold shares worth $8 million in February before the company reported worse-than-expected results. SEC filings revealed the transactions, including Schmidt’s sale of shares worth $5.4 million on Feb. 2 and 3.

A special committee of the Lordstowns board said in a June 14 report that stock sales were made by certain directors and executives for reasons unrelated to the company’s performance or the viability of the Endurance.