Lordstown Motors is seeking additional capital to begin production of its new Lordstown Endurance electric pickup.
The Ohio-based company, which bought GM’s Lordstown assembly plant in 2019, said in a regulatory filing on Tuesday that it had “going concern” and could remain operational in the next few months due to a lack of funding. Lordstown Motors CEO Steve Burns has scheduled a press conference with the Automotive Press Association next Tuesday, when he should provide a clearer picture of the situation the company faces.
Lordstown Motors shares fell more than 16% on Tuesday following the regulatory filing as investors bailed out their positions in the struggling startup.
GM owns 7.5 million Class A common shares of Lordstown Motors, which equates to a net worth of $ 75 million. The small stake in the business is representative of the value of the Lordstown Assembly Plant and other minor contributions it made to help Lordstown begin to retool the plant. Automotive industry analyst Sam Abuelsamid said Detroit Free Press this week that GM could still keep the Lordstown Motors plant due to go bankrupt, although that depends on the details of the deal between the two companies.
“It is possible that GM will take back possession of the plant,” Abuelsamid said The free press. “If debt were swapped for equity and Lordstown Motors went bankrupt, then GM would likely lose everything, although again, depending on how the deal was done, they could take the plant back or something. ‘a liquidation. “
Lordstown is still aiming for a September production start date for the Endurance pickup, which is marketed as a budget-conscious electric pickup for fleet customers. However, Burns acknowledged that this year’s production would be “at best” reduced to about half of its original target of 3,000 units.
The United States Securities and Exchange Commission opened an investigation into Lordstown Motors in May after a short sellers report by Hindenberg Research claimed the automaker misled investors into raising capital. The company previously said it has racked up 100,000 non-binding Endurance pre-orders, but Hindenberg says those pre-orders are “largely fictitious.”
“Our conversations with former employees, business partners, and a close examination of documents show that the company’s orders are largely fictitious and used as an accessory to raise capital and confer legitimacy,” the report said.
Lordstown Motors says it is cooperating with the SEC investigation.
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