Lordstown shares plunge as investor Foxconn alleges agreement breach

Lordstown Motors (RIDE.O) shares fell 25% after key stakeholder Foxconn claimed it broke its $170 million investment pact, and the EV truck producer warned it may not have enough cash to fund operations if the agreement falls through.

Foxconn’s letter to Lordstown cited Nasdaq’s delisting notice.

Lordstown denied the accusation and was negotiating with the Taiwanese contract manufacturer.

Foxconn’s actions are unjustified. “Their conduct has caused material and irreparable harm to the company,” Lordstown claimed.

“In the absence of a timely resolution, we will take all actions necessary to protect our business interests and enforce all our rights and remedies.”

Foxconn did not immediately comment. Lordstown shares fell 13 cents to $0.39 midmorning.

Lordstown stated “there is substantial doubt regarding our ability to continue as a going concern”. It threatened insolvency without a Foxconn, financial, or partner resolution.

Foxconn bought a near-20% interest in the loss-making U.S. electric truck producer for up to $170 million in November.

Lordstown sold its Ohio facility to Foxconn for $230 million in May 2022, omitting hub motor assembly and battery pack lines.

Lordstown said Foxconn had refused to buy $47.3 million in equity after the Committee on Foreign Investment in the United States on April 25 found no unresolved national security issues.

After General Motors (GM.N) closed its Ohio small car assembly plant in March 2019, Lordstown Motors bought the plant and equipment for $20 million.