Troubled electric vehicle company Lordstown Motors lands $ 400 million lifeline in stock sale deal – TechCrunch

Five weeks after Lordstown Motors issued a warning that it may not have sufficient funds to bring its electric truck to market, a hedge fund managed by investment firm Yorkville Advisors agreed to buy $ 400 million in stock over a three-year period. , according to a regulatory filing published Monday.

The tumult within Lordstown Motors, which has resulted in the resignation of its CEO and CTO, has put the company at risk of failure. This new deal could allow Lordstown to continue to provide much-needed capital to produce its first electric vehicle. If approved by shareholders, the hedge fund YA II PN will be able to purchase 35.1 million shares, or about 19.9% โ€‹โ€‹of the outstanding shares.

The capital provides a lifeline for Lordstown, which has struggled in recent months. The hedge fund, which can buy the shares at $ 7.48 per share, could also benefit financially if the share price rises.

Lordstown Motors is an offshoot of former CEO Steve Burns’ other company, Workhorse Group, a publicly traded battery-electric transportation technology company. Workhorse has a 10% stake in Lordstown Motors.

Ohio automaker was founded in 2019, and within a year reached an agreement to merge with special purpose acquisition company DiamondPeak Holdings Corp., with a market value of $ 1.6 billion. The company had planned to begin production of its Endurance pickup starting in the second half of 2021 at GM’s former assembly plant in Lordstown, Ohio.

Those plans failed, and a series of missteps and accusations of fraud compounded the company’s problems.

In March 2021, Hindenburg Research, the short-selling firm whose Nikola Motor report led to an investigation by the Securities and Exchange Commission and the resignation of its founder, said it had taken a short position in Lordstown Motors. Hindenburg said at the time that its short position was based on a company that “has no income or salable products, which we believe has misled investors in both its demand and production capacity.”

Hindenburg denied that the company has booked 100,000 pre-orders for its electric truck, a statistic shared by Lordstown Motors in January. The short seller said that “a thorough investigation reveals that the company’s orders appear largely fictitious and are used as support to raise capital and confer legitimacy.”

Two months later, Lordstown reported in its first-quarter earnings that Endurance production volumes would likely be half, from around 2,200 vehicles to just 1,000, due to a lack of financing.

Lordstown executives sank into a deeper hole trying to calm investors a day after its CEO and CTO resigned with statements that they had binding customer orders that would fund limited production of their electric truck through May 2022. The the company retracted those statements Within days.

The Department of Justice and the SEC are separate researching the company.

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