Lordstown Motors Corp.’s
skill to remain in enterprise for no less than one other 12 months stays doubtful till it secures extra funding and its market worth rises, its finance chief mentioned after the electric-truck maker offered its manufacturing facility to lift money.
Lordstown, which goals to launch its first automobile this 12 months and doesn’t generate any income but, issued a going-concern warning in June 2021, flagging worries about its monetary well being.
“It will be there until we raise sufficient capital and get to a higher market capitalization,” Chief Financial Officer Adam Kroll mentioned Monday, referring to the going-concern warning. A enterprise is taken into account a going concern except administration intends to liquidate it or stop operations.
The firm final week mentioned it closed a transaction to promote its manufacturing facility in Lordstown, Ohio, to associates of contract assembler
Foxconn Technology Group.
Lordstown obtained $230 million for the manufacturing facility, previously a General Motors Co. manufacturing web site, and was reimbursed roughly $27 million in working and enlargement prices by Taipei-based Foxconn, which had earlier bought about $50 million in Lordstown shares.
Lordstown, which went public in 2020 by means of a merger with a special-purpose acquisition firm, is within the means of crash testing the Endurance, its first automobile, and intends to launch industrial manufacturing within the third quarter.
Foxconn, formally often known as Hon Hai Precision Industry Co., will construct the Endurance for Lordstown and has dedicated $100 million to a brand new three way partnership between the 2 firms. The dedication features a $45 million mortgage to Lordstown.
“We are not a one-trick pony anymore,” Mr. Kroll mentioned, pointing to plans to develop extra autos with Foxconn.
Lordstown wants to lift an extra $150 million in capital earlier than the top of the 12 months to execute on its plans for 2022, which embody constructing about 500 autos, Mr. Kroll mentioned. The firm goals to have no less than $75 million to $100 million in money on its stability sheet on the finish of this 12 months, he mentioned.
The firm held money and money equivalents of $203.6 million on the finish of the primary quarter, down from $587 million a 12 months earlier. Lordstown booked a lack of $89.6 million for the quarter, in contrast with a $125.2 million loss in the identical interval a 12 months earlier.
Lordstown may increase funds by means of a public or personal providing to institutional buyers, Mr. Kroll mentioned, including which may contain promoting debt or fairness. “There may be other things that could involve more strategic partners,” he mentioned.
Management is working full throttle towards the industrial launch of the Endurance, Mr. Kroll mentioned, including that might be an necessary milestone for the corporate. “A big part of raising cash is getting to launch,” he mentioned.
Lordstown may face challenges elevating the funds it wants amid the latest market selloff, which has hit know-how and different shares arduous. The firm’s shares closed at $2.27 Monday, down by 7.4% for the day and by 39% for the reason that starting of the 12 months. Its market capitalization stood at $448.1 million.
“We are definitely in a risk-off environment for EV-startups,” Mr. Kroll mentioned. “I cannot project if or when that might change.”
Analysts stay skeptical in regards to the firm’s outlook, pointing to points together with fundraising and altering investor sentiment. “Ultimately, we see the path ahead for [the company] as increasingly complicated,”
Emmanuel Rosner,
an analyst at
Deutsche Bank,
wrote in a observe to shoppers final week.
Lordstown final 12 months disclosed investigations by the Securities and Exchange Commission and the Justice Department associated to its SPAC transaction and its representations of preorders for the Endurance.
The firm earlier this month mentioned it didn’t have sufficient money to execute its marketing strategy for the 12 months. It mentioned the scenario raised substantial issues about its skill to proceed as a going concern.
“As we seek additional sources of funding, there can be no assurance that such financing would be available to use on favorable terms or at all,” Lordstown mentioned in its quarterly report. The firm additionally cited increased supplies prices and uncertainty round regulatory approval as danger elements, amongst different issues.
Write to Nina Trentmann at [email protected]
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