A Rosetown Motors Corporation Endurance electric pickup truck on display during its launch event in Rosetown, Ohio, June 25, 2020.
Matthew Hatcher | Bloomberg | Getty Images
Struggling electric truck makers rosetown motors announced Tuesday that it would file for Chapter 11 bankruptcy protection and put itself up for sale amid a dispute over an investment pledged by a Taiwanese manufacturer. Foxconn.
Shares fell as much as 60% in early trading on the news, but recovered slightly to close Tuesday trading 17% lower than Monday’s closing price.
Rosetown filed suit against Foxconn at the same time it filed for bankruptcy. The company accused Foxconn of fraud and of failing to abide by an agreement in which the Taiwan-based company invested up to $170 million in Lordstown and the two companies worked together on a range of new electric vehicles. condemned.
In a statement to CNBC, Foxconn said it wanted to continue discussions to reach a solution “satisfying all stakeholders” without “bringing to unfounded legal action.” However, in light of the lawsuit and that Lordstown has been characterized as an attempt to “mislead the public,” it reserves the right to suspend negotiations and take legal action on its own.
Lordstown launched in a factory we acquired in 2019. general motors and the Strong support for the Trump administrationlast year signed a deal to sell its Ohio factory to Foxconn for $230 million. After contract Closing in May 2022Lordstown and Foxconn have agreed to a second deal in which Foxconn will: Invest up to $170 million Acquired a 19.3% stake in a Rosetown start-up.
Foxconn paid the first $52.7 million due under the deal last year. The next payment of $47.3 million was due within 10 days of regulatory approval by the Committee on Foreign Investment in the United States. Rosetown said approval was secured in late April, but Foxconn did not pay.
Instead, Foxconn has moved to Lordstown to see if the startup breached contract By allowing the stock price to drop below $1 per share. Lordstown conducted a 1:15 reverse stock split in May, pushing the stock past the critical $1 level.
In early May, Lordstown warned investors: more likely to file for bankruptcy Failure to reach an agreement with Foxconn or obtain additional funding elsewhere. A few days later, Lordstown announced it was almost out of cash and would be forced to sell. Production of Endurance electric pickups discontinued Unless we can find a strategic partner.
Lordstown lost $171.1 million in the first quarter and had only $108.1 million in cash available at the end of March.
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