LMC, Foxconn extend deadline

Have until May 14 to complete plant sale, joint manufacturing agreements

LORDSTOWN -- Lordstown Motors Corp. will update its shareholders and the public May 9 on an agreement it has with Taiwanese electronics assembler and tech giant Foxconn to purchase the electric-vehicle startup's assembly plant.

The companies had targeted today to have the final asset purchase agreement and affiliate contract manufacturing and joint product agreements in place, but, according to a release sent after trading closed Friday, extended the deadline to solidify the deals to May 14.

The proposed agreement calls for Foxconn to purchase the 6.2 million-square-foot factory and surrounding land for $230 million and make a $50 million equity investment, the latter of which the company did in September.

Also so far, Foxconn made down payments of $100 million on Nov. 18; $50 million on Jan. 28; and $50 million on April 15. The balance is due at closing.

The transaction has cleared the Committee on Foreign Investment in the United States, which is part of the U.S. Treasury that reviews certain transactions involving foreign investment in the U.S. to determine their effect on national security.

The asset purchase agreement balances on coming to terms on a contract manufacturing agreement for Lordstown Motors's flagship vehicle, the Endurance. That agreement, according to Lordstown Motors officials in February, is a condition of the factory sale being finalized.

The sides also agreed last year to pursue a joint product development agreement to co-design and develop future vehicles based on Foxconn's mobility in harmony (MIH) platform.

The latter agreement is vital for Lordstown Motors to raise millions more needed to launch the Endurance this year, company officials also said in February. That amount is about $250 million. Limited production of the truck is expected to begin in September.

Under the asset purchase agreement, if the transactions are not finalized by May 14, Lordstown Motors is obligated to repay the down payments to Foxconn by then, unless the repayment deadline is extended.

Lordstown Motors has given Foxconn a first priority security interest in substantially all of its assets to secure the repayment obligation and "does not currently have sufficient available cash to repay the down payments by the repayment deadline," the release states.

According to a regulatory filing in February, Foxconn can foreclose on its liens on some of most of Lordstown Motors' assets. Under that scenario, Lordstown Motors "would not likely be able to continue as a going concern or realize any value from our assets," the filing states.

The company on May 9 also will release its first-quarter financial results before the market opens. The release will be followed by a conference call.

Lordstown Motors' stock fell 3.5 percent in trading Friday to close at $2.18.