Lordstown Motors and Foxconn broaden strategic partnership

8 November 2022, 16:29:53

Lordstown Motors and Foxconn announced that they reached an agreement pursuant to which Foxconn agreed to make additional equity investments in Lordstown Motors in the form of $70 million of LMC's Class A common stock, $0.0001 par value per share, and up to $100 million of a newly created Series A Convertible Preferred Stock, $0.0001 par value per share. Upon completion of the Investment Transactions, Foxconn is expected to hold all of LMC’s outstanding Preferred Stock and 18.3% of its Common Stock on a pro-forma basis, and will have the right to designate two members of LMC’s Board of Directors.

Lordstown Motors will use the proceeds from the sale of the Common Stock for general corporate purposes and the proceeds from the sale of the Preferred Stock to fund development and design activities for a new electric vehicle program in collaboration with Foxconn. The $100 million direct Preferred Stock investment replaces the joint venture funding previously announced by Foxconn and LMC.

Pursuant to the agreements governing the Investment Transactions, at an initial closing expected to be held on or about November 22, 2022, subject to customary conditions, Foxconn will purchase an aggregate of approximately 12.9 million shares of Common Stock at a purchase price of $1.76 per share, resulting in total proceeds of $22.7 million, and 300,000 shares of Preferred Stock at a purchase price of $100 per share, resulting in total proceeds of $30 million. The remaining shares of Preferred Stock will be purchased by Foxconn based on achieving certain EV Program funding milestones to be agreed-upon by the parties. Following receipt of applicable regulatory approvals, including a review by the Committee on Foreign Investment in the United States (“CFIUS”), and subject to other customary conditions, Foxconn will purchase an additional 26.9 million shares of Common Stock at a purchase price of $1.76 per share, resulting in total proceeds of approximately $47.3 million (the “Subsequent Common Closing”). Pursuant to the transaction agreements, Foxconn has also been granted the right to participate in future equity offerings by LMC to prevent dilution of its ownership interest.

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