May 1 (Portal) – Shares of Lordstown Motors (RIDE.O) fell Monday, closing 23% lower after major shareholder Foxconn claimed it had breached its $170 million investment deal and the electric Truck maker warned it could be forced to file for bankruptcy.
Lordstown warned in a filing with the Securities and Exchange Commission that “there are significant doubts about our ability to continue as a going concern.” Without a resolution with Foxconn, other funding or new partners, the company could be forced to file for bankruptcy or cease operations, it added.
Lordstown said it was in talks with the Taiwanese contract manufacturer to seek a solution.
It dismissed Foxconn’s allegations of breach of its agreement, saying the allegation was based on a delisting notice Nasdaq sent to the Ohio-based automaker. Lordstown said last month the notice had no immediate impact on the listing and that it had until October 16 to regain compliance with Nasdaq rules.
“Foxconn’s actions are totally unjustified. Their conduct has caused significant – and increasingly irreparable – damage to the company,” Lordstown said in a statement.
“In the absence of a timely resolution, we will take all necessary steps to protect our business interests and enforce all of our rights and remedies.”
Foxconn did not immediately respond to a request for comment.
Lordstown shares, which fell more than 50% at times on Monday, closed at 40 cents, down 12 cents in strong trading. They are down 8% in after-hours trading.
Foxconn struck a deal in November to take a nearly 20% stake in the loss-making US electric truck maker for up to $170 million.
In May 2022, Lordstown entered into a deal to sell its Ohio factory to Foxconn for $230 million, excluding assets such as hub motor assembly and battery pack lines.
Lordstown said Foxconn refused to buy $47.3 million worth of stock, shortly after the United States Foreign Investment Committee ruled on March 25.
Lordstown Motors bought a former small car assembly plant and equipment from General Motors Co. for $20 million in Ohio after the Detroit automaker closed it in March 2019.
Reporting by Tiyashi Datta in Bengaluru; Edited by Anil D’Silva
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