Foxconn investing $170 million in Lordstown Motors
In November of 2021, Taiwanese electronic manufacturer Foxconn and Lordstown Motors Company announced the companies would enter into an asset purchase agreement.
On Monday, Foxconn announced that the company has agreed to make additional equity investments in LMC in the form of $70 million of LMC’s Class A common stock, and up to $100 million of a newly created Series A Convertible Preferred Stock. Foxconn is expected to hold all of LMC’s outstanding Preferred Stock and 18.3% of its Common Stock on a Pro-forma basis and will have the right to designate two members of LMC’s Board of Directors.
The $100 million direct Preferred Stock investment replaces the joint venture funding previously announced by Foxconn and LMC. In May, Foxconn announced it would put $100 million towards the new joint venture, including a loan to Lordstown for $45 million to support its initial capital commitment.
Lordstown Motors officials said it will use the proceeds from the sale of the common stock for general corporate purposes and the proceeds from the sale of the preferred stock to fund development and design activities for a new electric vehicle program in collaboration with Foxconn and electric vehicles.
The initial closing is expected to be held on November 22. Foxconn will purchase approximately 12.9 million shares of Common Stock at $1.76 per share, with total proceeds of $22.7 million, and 300,000 shares of Preferred Stock at a purchase price of $100 per share, resulting in total proceeds of $30 million.
The remaining shares of Preferred Stock will be purchased by Foxconn based on achieving certain EV Program funding milestones.
Following receipt of regulatory approvals, Foxconn will purchase an additional 26.9 million shares of Common Stock at a purchase price of $1.76 per share, resulting in total proceeds of approximately $47.3 million. Foxconn has also been granted the right to participate in future equity offerings by LMC to prevent the dilution of its ownership interest.
Foxconn manufactures electronic products for companies worldwide, including Apple, Nintendo, Sony, Google Pixel devices, and Microsoft Xbox consoles.
Lordstown Motors was founded in 2018 by Steve Burns, former CEO of Workhorse Group.
Lordstown Motors became the owner of the former GM plant in Lordstown after signing a sales agreement with automaker General Motors in May 2019.