RIDE Lordstown Motors Corporation

By Will Feuer

Foxconn Technology Group, the world's biggest contract manufacturer for electronics, is trying to back out of its deal to increase its stake in Lordstown Motors Corp., the electric-vehicle startup said.

Foxconn agreed in November to spend up to $170 million to buy both common stock and newly created preferred shares in Lordstown, a crucial cash injection for the startup, which was still working to ramp up production of its debut EV truck, called the Endurance.

Lordstown said Monday that Foxconn closed part of the investment agreement in November, buying about $22.7 million of Class A common stock and $30 million of preferred stock.

Foxconn didn't immediately respond to a request for comment.

According to Lordstown, Foxconn agreed to further buy about 26.9 million shares of Lordstown shares for about $47.3 million within 10 business days after the companies received clearance from the Committee on Foreign Investment in the United States.

Lordstown said it received CFIUS clearance on April 25, giving the companies until May 8 to close the latest round of investment.

However, Lordstown said it received notice from Foxconn on April 21 that asserted Lordstown has breached the terms of the deal by allowing its stock price to fall below $1.00 a share for too long, putting it out of compliance with Nasdaq listing rules.

Foxconn said it would back out of the deal if the breach isn't resolved within 30 days, Lordstown said Monday. Lordstown said it responded to Foxconn, disputing its ability to back out of the deal.

Lordstown said it believes the deal remains intact and the company intends to enforce its rights under the deal.

"The company is in discussions with Foxconn to seek a resolution regarding these matters," Lordstown said in a securities filing.

Shares of Lordstown fell almost 21%, to 41 cents, in morning trading.

Write to Will Feuer at Will.Feuer@wsj.com

(END) Dow Jones Newswires

May 01, 2023 09:58 ET (13:58 GMT)

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