Foxconn Increases Stake In Lordstown Motors With Another $170 Mln Investment

(RTTNews) - Foxconn, the assembler of iPhones for Apple, is increasing its investment in electric pick-up truck company Lordstown Motors Corp. (RIDE).

Foxconn has agreed to make additional equity investments in Lordstown Motors in the form of $70 million of common stock and up to $100 million of a newly created preferred stock.

Once the deal is completed, Foxconn is expected to hold all of Lordstown's outstanding preferred stock and 18.3% of its common stock on a pro-forma basis. Foxconn will also have the right to designate two members of Lordstown Motors Board of Directors.

Lordstown Motors 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.

The $100 million direct preferred stock investment replaces the joint venture funding previously announced by Foxconn and LMC.

The additional investment comes a year after the electric light-duty truck manufacturer sold its 6.2-million-square-foot Lordstown, Ohio, factory to Foxconn. As part of that $230 million deal, which included a direct investment of $50 million, Foxconn agreed to help Lordstown Motors manufacture its Endurance pickup truck. Production of the electric pickup truck began in September 2022.

The investment will occur in tranches and is subject to a review by the Committee on Foreign Investment in the United States.

An initial closing is expected to be held later this month. Foxconn will purchase about 12.9 million shares of common stock at a purchase price of $1.76 per share, resulting in total proceeds of $22.7 million. Foxconn will also buy 300,000 shares of preferred stock at $100 per share, resulting in total proceeds of $30 million.

The remaining shares of preferred stock will be purchased by Foxconn as Lordstown Motors achieves certain milestones. After receiving approval from CFIUS, Foxconn will buy an additional 26.9 million shares of common stock at a purchase price of $1.76 per share, resulting in total proceeds of about $47.3 million.

Daniel Ninivaggi, Executive Chairman of LMC commented, "Since announcing our first transaction with Foxconn more than a year ago, it has been our objective to develop a broad strategic partnership that leverages the capabilities of both companies. Foxconn's latest investment is another step in that direction. Our Board of Directors and management team strongly believe that deep collaboration with the Foxconn EV ecosystem, including the Mobility-in-Harmony (MIH) open-source platform, offers tremendous opportunities to meet our mutual ambition to accelerate EV adoption globally. I look forward to welcoming Foxconn representatives to our Board and exploring other ways to deepen our partnership."