Foxconn (Hon Hai) buys Lordstown Motors' assembly plant in Ohio

1 October 2021, 09:00:23

Lordstown Motors Corp. and Hon Hai Technology Group (Foxconn) announced that they have reached an agreement in principle to work jointly on Lordstown Motors' electric vehicle programs in Lordstown Motors' 6.2 million square foot production and assembly plant in Lordstown, Ohio.

Beyond certain customary provisions, the Agreement is non-binding and subject to the negotiation and execution of definitive agreements. The parties on the same date have 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 average daily volume adjusted price over the past 15 trading days prior to the execution of the Agreement in Principle. Foxconn has agreed to retain these shares for a specified period.

The agreement between both companies would allow Lordstown Motors to leverage the technology and manufacturing expertise of Foxconn, as Lordstown Motors pursues the production of electric vehicles at its Ohio facility. The goal of the partnership is to present both Lordstown Motors and Foxconn with increased market opportunities in scalable electric vehicle production in North America.

The Agreement provides as follows:

Lordstown Motors and Foxconn will use commercially reasonable best efforts to negotiate a definitive agreement pursuant to which Foxconn would purchase the Lordstown facility, excluding Lordstown Motors’ hub motor assembly line, battery module and packing line assets, certain intellectual property rights and other excluded assets, for $230 million.
Both entities would also negotiate a contract manufacturing agreement, which would be a condition to closing of the facility purchase, whereby Foxconn would manufacture Lordstown Motors’ Endurance full-size pickup truck at its Lordstown facility. Lordstown Motors would also agree to provide Foxconn with certain rights with respect to future vehicle programs.
Concurrently with the closing under the definitive agreements, Lordstown Motors would issue warrants to Foxconn that are exercisable until the third anniversary of the closing for 1.7 million shares of common stock at an exercise price of $10.50 per share.
The parties have agreed to explore licensing arrangements for additional pickup truck programs.
Following the closing under the definitive agreements, Lordstown Motors would enter into a long-term lease for a portion of the existing facility for its Ohio-based employees, and Foxconn would offer employment to agreed upon Lordstown operational and manufacturing employees.

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