Cash-Strapped Lordstown Motors Raises $400M Through Private Placement

Lordstown Motors Corp. RIDE, which issued a going concern warning in June, has managed to secure financing.

What Happened: Electric pickup truck developer Lordstown revealed in a filing Monday it has entered into an equity purchase agreement with YA II PN Ltd, pursuant to which the latter has agreed to purchase up to $400 million in Class A common stock.

YA is a fund managed by New Jersey-based Yorkville Advisors Global.

The purchase price of Class A shares will be equal to 97% of the simple average of the daily volume-weighted average price for the three trading days following the advance notice, the company said.

Related Link: Fisker, Lordstown Could Be EV Latecomers, Goldman Sachs Says In Downgrade

Why It's Important: Lordstown, the manufacturer of the yet-to-be commercialized Endurance EV pickup truck, is being investigated by the SEC for overstating preorders.

The company said in a July 15 filing with the SEC the security regulatory agency has issued two subpoenas for the production of documents and information, including relating to the SPAC deal with DiamondPeak and pre-orders of vehicles.

The company is also being investigated by U.S. Attorney's Office for the Southern District of New York for the same.

Lordstown's going concern warning came in early June, when it said its budget only provides for a limited commencement of production in 2021 and that additional funding must be secured for production in 2022 and beyond.

Lordstown was looking at commencing commercial production of its Endurance pickup truck in September and starting initial sales in late 2021.

In mid-June, the company announced a C-suite shakeup that saw the ouster of the then-CEO Steve Burns and CFO Julio Rodriguez. 

RIDE Price Action: At last check, Lordstown shares were trading down 1.47% at $7.37. 

Related Link: Lordstown Motors Overhauls Management; CEO, CFO To Step Down

Photo: courtesy of Lordstown.