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LMC, Foxconn close on first round of funding as planned

LORDSTOWN — Lordstown Motors Corp. and Foxconn closed Tuesday, as planned, on the first round of a $170 million equity investment the Taiwanese technology and electronics giant is making into the electric-vehicle startup.

The news, however, did little to stop the plunge of Lordstown Motors’ stock.

Regulatory documents show Lordstown Motors completed the transaction worth about $52.7 million, proceeds Lordstown Motors will use to run the company and start a new EV development program with Foxconn.

The initial closing is for approximately 12.9 million shares of common stock at $1.76 per share and 300,000 shares of preferred stock at $100 per share.

The deal, announced earlier this month, also calls for a second closing for about 26.8 million more shares of common stock at $1.76 per share — worth about $47.2 million — after approval from the Committee on Foreign Investment in the United States, which reviews certain transactions involving foreign investment in the U.S. to determine their effect on national security.

Also, “upon satisfaction of certain milestones related to predevelopment and design activities” of the new joint EV program, Foxconn has agreed to purchase up to 700,000 additional shares of preferred stock at $100 per share, Tuesday’s filing with the U.S. Securities and Exchange Commission states.

Proceeds from the sale of the common stock will be used “for general corporate purposes” and the proceeds from the sale of the preferred stock “to fund development and design activities” for the EV program, which replaces a previously announced joint venture to co-design electric vehicles.

“Foxconn’s additional investment in LMC is a strong sign of confidence in our team’s product development and engineering capabilities and will help accelerate the EV ambitions of both companies,” the company stated Nov. 8 in its third quarter financial results release.

Still, the news had little impact on Lordstown Motors’ stock, which was trading Tuesday morning at $1.34 per share. Shares hit an all-time low of $1.31 per share shortly after the market opened at 9 a.m. It closed at $1.33 per share.

The company’s stock, traded under the RIDE ticker on the Nasdaq exchange, lost nearly 21 percent of its value in the past five days.

Foxconn acquired Lordstown Motors’ factory in Lordstown, the former General Motors small-car assembly plant, for $230 million in May. Part of the deal was that Foxconn — the world’s largest contract manufacturer of electronics — assemble the EV company’s first vehicle, the Lordstown Motors Endurance truck.

Production of the truck has begun, but in limited numbers and the company announced earlier this month that production estimates for 2022 were lower than previously predicted.

The company is at the Los Angeles Auto Show with the truck, which is a finalist for the North American Truck of the Year.

rselak@tribtoday.com

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