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LORDSTOWN -- Foxconn has agreed to invest up to $170 million more into Lordstown Motors Corp., a large portion of which the electric-vehicle startup intends to use to develop and design a new EV program in collaboration with the Taiwanese tech and electronics giant.
The agreement between Lordstown Motors and a Foxconn affiliate, Foxconn Ventures Pte. Ltd., calls for Foxconn to make an additional equity investment of $70 million of Lordstown Motors' common stock and up to $100 million of a newly created Series A Convertible Preferred stock.
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 EV program with Foxconn, which replaces a previously announced joint venture to co-design electric vehicles, according to a release Monday after the market closed.
Upon completion of the investment transactions, Foxconn is expected to hold all of Lordstown Motors' outstanding preferred stock and 18.3 percent of its common stock on a pro-forma basis, and will have the right to designate two members of Lordstown Motors' board of directors.
When the transaction closes, which is expected to be Nov. 22, Foxconn will purchase approximately 12.9 million shares of common stock for $1.76 per share, resulting in $22.7 million, and 300,000 shares of preferred stock for $100 per share, resulting $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.
After the transaction receives regulatory approval and is reviewed by the Committee on Foreign Investment in the United States, Foxconn will purchase 26.9 million more shares of common stock for $1.76 per share, resulting in total proceeds of approximately $47.3 million, the release states.
The committee on foreign investment 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.
Also, Foxconn is able to participate in future equity offerings by LMC to prevent dilution of its ownership interest.
Foxconn in May closed its acquisition of Lordstown Motors' factory, the former General Motors small-car assembly plant, for $230 million and agreed to become the contract manufacturer for Lordstown Motors' flagship vehicle, the all-battery Endurance pickup truck.
"Since announcing our first transaction with Foxconn more than a year ago, it has been our objective to develop a broad strategic partnership that leverages the capabilities of both companies. Foxconn's latest investment is another step in that direction," said Daniel Ninivaggi, executive chairman, Lordstown Motors.
Today, Lordstown Motors will release is third quarter 2022 financial results before the market opens. Lordstown Motors stock, traded on the Nasdaq exchange under the RIDE ticker, was down 4.1 percent in trading to close at $1.85 per share Monday. The stock rose in after-hours trading after the investment deal with Foxconn was announced.