EVs: Lordstown Motors Finds Much-Needed Money
Lordstown Motors, an embattled electric car startup, seems to be finding hope in the current markets. It’s secured a funding lifeline after running into major cash woes in its operations.
- To recall, Lordstown warned last month that it didn’t have sufficient capital to fund the commercial production of its electric truck and thus risked jeopardy of its efforts. But now, the company appears to have secured a $400mn funding commitment, regulatory filings show.
- According to the filing, a New Jersey-based hedge fund named Yorkville Advisors has committed to purchase up to $400mn of Lordstown stock over the next three years, as the publicly traded electric-car startup would get the money to fund its operations.
- Lordstown and Yorkville have entered into a binding equity purchase agreement for the latter to buy Class A common stock of Lordstown for at least $7.48 a share on the public markets over the next three years. Lordstown stock (NASDAQ: RIDE) currently trades for under $7.
- Weirdly, Lordstown agreed to first hand over $3mn of shares to Yorkville for the hedge fund to proceed with its purchase agreement.
- Lordstown went public in 2020, one year after it was founded, through a merger with a special-purpose acquisition company (SPAC). Then shortly after the merger came fraud accusations against the company from a short-seller that then led to formal investigations from the US SEC and Justice Department.
- Last month, Lordstown warned that it didn’t have enough cash to fund commercial production of its conceptual electric truck, despite raising nearly $700mn from its SPAC merger. Now, with $400mn that it’s secured, the company’s investors can hope it delivers on production, big hopes.