Lordstown Motors Raises Up to $400 Million

Lordstown Motors, a struggling electrical pickup truck firm, stated Monday that it had reached a cope with an funding agency to lift $400 million over three years.

The funding agency, Yorkville Advisors, has agreed to purchase as much as $400 million of Lordstown’s shares, which would offer badly wanted money to an organization that this summer season stated it may exit of enterprise with out elevating extra money.

The deal is doubtlessly fairly lucrative to Yorkville as a result of it’ll purchase the inventory for at the very least $7.48 a share, the closing worth on Friday. If Lordstown inventory rises, the hedge fund stands to make a revenue.

Yorkville agreed that it might not wager in opposition to Lordstown’s inventory. Lordstown additionally agreed to provide Yorkville 371,000 shares, that are value practically $3 million primarily based on the present inventory worth, for agreeing to the deal.

As soon as hailed by former President Donald J. Trump as a savior of producing jobs in Ohio, Lordstown has struggled to supply automobiles whereas spending tons of of tens of millions of {dollars}. The corporate can also be being investigated by the Securities and Change Fee and the Justice Division.

Lordstown, which acquired a former Normal Motors manufacturing facility in Lordstown, Ohio, went public in October by merging with DiamondPeak Holdings, a particular goal acquisition firm led by a rich Wall Avenue actual property investor.

SPACs increase cash by promoting inventory earlier than they’ve any belongings, after which go looking for a enterprise. They provide the businesses they merge with a strategy to listing on the inventory market with much less disclosure and scrutiny than is typical in an preliminary public providing.

The S.E.C. is investigating whether or not the corporate and its founder, Steve Burns, who resigned as chief govt in June, overstated claims about curiosity from business patrons in its electrical truck, the Endurance. Federal prosecutors are additionally investigating the corporate’s preorder claims and its merger with DiamondPeak.

The corporate, which has beefed up its public relations operation in current weeks, is being represented by legal professionals from Sullivan & Cromwell, an enormous New York regulation agency, in reference to the investigations. Mr. Burns has employed two legal professionals from Simpson Thacher & Bartlett, one other huge New York agency.

Yorkville, which focuses on investing in small corporations, shouldn’t be with out its personal controversy. In 2012, the S.E.C. accused the agency of misvaluing its belongings to cover losses from traders. However in 2018, a federal choose dealt an enormous blow to the S.E.C. by dismissing a lot of the civil fraud claims in opposition to Yorkville. Regulators and Yorkville in the end agreed to dismiss the matter.

Lordstown’s inventory worth has tumbled from a peak of virtually $31 in February and is now buying and selling at lower than the $10 worth that DiamondPeak bought shares at throughout its preliminary public providing. The inventory was down about 1 p.c on Monday afternoon.

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