Lordstown Motors and Hon Hai Technology Group announce tentative agreement
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Partnership to jointly work on scalable electric vehicle programs at Lordstown Motors’ Ohio Assembly Plant
LORDSTOWN, Ohio, September 30, 2021 (GLOBE NEWSWIRE) – Lordstown Motors Corp. (“Lordstown Motors”) (Nasdaq: RIDE), a supplier of electric light trucks focused on the commercial fleet market, and global technology company Hon Hai Technology Group (“Foxconn”) (TWSE: 2317), announced today hui have reached an agreement in principle to work jointly on Lordstown Motors ‘electric vehicle programs at Lordstown Motors’ 6.2 million square foot production and assembly plant in Lordstown, Ohio. Beyond certain usual provisions, the Contract is non-binding and subject to the negotiation and execution of final agreements. The parties on the same date entered into a subscription agreement, under which Foxconn will purchase approximately $ 50 million of Lordstown Motors common stock directly from Lordstown Motors at a price of $ 6.8983 per share, the adjusted average daily price. based on volume over the last 15 transactions. days before the signing of the Agreement in Principle. Foxconn has agreed to hold these shares for a specified period.
The deal between the two companies would allow Lordstown Motors to leverage Foxconn’s technology and manufacturing expertise, as Lordstown Motors continues production of electric vehicles at its Ohio plant. The goal of this partnership is to present both Lordstown Motors and Foxconn with increased market opportunities in the production of scalable electric vehicles in North America.
The Agreement provides as follows:
- Lordstown Motors and Foxconn will use commercially reasonable efforts to negotiate a definitive agreement whereby Foxconn would purchase the Lordstown facility, excluding the hub motor assembly line, battery module and power plant assets. Lordstown Motors’ packaging line, certain intellectual property rights and other assets excluded, for $ 230 million.
- The two entities would also negotiate a contract manufacturing deal, which would be a condition on closing the purchase of the facility, whereby Foxconn would manufacture Lordstown Motors’ full-size Endurance pickup truck at its Lordstown plant. Lordstown Motors would also agree to provide Foxconn with certain rights regarding future vehicle programs.
- Concurrent with the closing under the Definitive Agreements, Lordstown Motors would issue warrants to Foxconn which can be exercised until the third anniversary of closing for 1.7 million common shares at an exercise price of 10.50 $ per share.
- The parties have agreed to explore licensing agreements for other pickup truck programs.
- After the final agreements close, Lordstown Motors would enter into a long-term lease for a portion of the existing facilities for its Ohio-based employees, and Foxconn would offer employment to the agreed Lordstown operating and manufacturing employees.
Young Liu, Chairman of Hon Hai Technology Group, said, “We have high expectations from this partnership that we will be able to successfully integrate our resources with Lordstown Motors. In addition to meeting the goal of moving forward in our schedule to establish electric vehicle production capacity in North America, this also reflects Foxconn’s flexibility in providing design and production services for different vehicle customers. electric. This mutually beneficial relationship is a milestone for Foxconn’s EV business and our transformation strategy. I believe the innovative design of the Endurance pickup truck, with its unique hub motors, provides a beneficial user experience and manufacturing efficiency. It will undoubtedly thrive as part of our partnership and our business model. “
In addition, this facility would serve as a quick-to-market asset that would also support Foxconn’s partner and customer, Fisker Inc.
Daniel Ninivaggi, CEO of Lordstown Motors Corp., said: “We are excited about the prospect of joining forces with a world-class smart manufacturer like Foxconn and believe this relationship would bring operational, technological and chain benefits. supply to our business and would accelerate overall vehicle-to-scale production and increased employment at the Lordstown plant. The partnership would allow Lordstown Motors to take advantage of Foxconn’s extensive manufacturing expertise and profitable supply chain, while allowing Lordstown Motors to focus on commercializing Endurance, developing service offerings for our fleet customers and the design and development of new innovative vehicle models. . “
As part of Foxconn’s announcement, Lordstown Motors also today provided a financial and production outlook update.
About Lordstown Motors Corp.
Lordstown Motors is an Ohio-based electric vehicle (EV) innovator that develops high-quality light commercial vehicles, with the all-electric Endurance pickup truck as the first vehicle launched at the Lordstown, Ohio plant. Lordstown Motors has engineering, research and development facilities in Farmington Hills, Michigan and Irvine, California. For more information visit www.lordstownmotors.com.
About Hon Hai
Founded in Taiwan in 1974, Hon Hai Precision Industry Co., Ltd. (“Foxconn Technology Group”) (2317: Taiwan) is the world’s largest electronics manufacturer. Hon Hai is also the leading provider of technology solutions and it continually leverages its software and hardware expertise to integrate its unique manufacturing systems with emerging technologies. To learn more, visit www.honhai.com.
This press release contains forward-looking statements. These statements are made under the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. These statements may be identified by words such as “” intends “,” should “,” must be ”, or the negative of these terms, or other comparable terminology. Forward-looking statements are statements that are not historical facts. Such forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, which could cause actual results to differ materially from the forward-looking statements contained herein due to many factors, including, but not limited to not limited to: our limited operation history and our significant projected financing needs; our liquidity position; the need to raise substantial additional capital to continue ongoing operations; risks associated with converting and retooling our plant and ramping up production; our inability to secure binding purchase orders from customers and the inability of potential customers to integrate our electric vehicles into their existing fleets; our inability to retain key personnel and hire additional personnel; competition in the electric pickup truck market; supply chain disruptions; the potential inability to source essential components; our inability to develop a commercial distribution network; the ability to protect our intellectual property rights; and failure to obtain the required regulatory approvals. In addition, our tentative agreement with Foxconn is non-binding and subject to the negotiation and execution of definitive agreements. No assurance can be given that final agreements will be made on the terms contemplated, if at all. No assurance can be given either as to the timing of such agreements. In addition, potential supply chain disruptions and their impact on testing and other activities could present challenges that would impact our commercial production schedule. Forward-looking statements speak only as of the date on which they are made, and Lordstown Motors does not undertake to update any forward-looking statements to reflect events or circumstances subsequent to the date of this press release.
Carter W. Driscoll, CFA