Foxconn out a new investment package of $170 million in Lordstown Motors. Along with it, the manufacturer of the electronic products secured a collaboration for a joint electric vehicle project. Initially, the first investment in the car manufacturer was last year, purchasing its Ohio production facility.
Furthermore, Foxconn has continued to expand its partnership with the automaker. Foxconn’s joint partnership with Lordstown helped get the automaker’s production up and running and helped secure financial stability in the company after previous leadership failed to launch automotive manufacturing. Foxconn made additional equity investments in Lordstown Motors totaling $170 million, the company announced last night. $100 million will go toward a newly created Series A Convertible Preferred Stock, while the additional $70 million will be used to purchase Lordstown’s common stock. With the purchase, Foxconn now holds 18.3 percent of Lordstown’s common stock on a Pro-forma basis giving them the right to designate two members of the automaker’s Board of Directors.
Foxconn will relinquish these Board positions if it does not maintain a certain level of ownership in Lordstown’s common stock, it said. The $100 million investment for direct Preferred stock will help fund Lordstown’s “development and design activities for a new electric vehicle program in collaboration with Foxconn.” Meanwhile, the $70 million of common stock will be used to fund general corporate activities. The sale of 12.9 million shares of Common stock will exchange hands on November 22 at a price of $1.79 per share. This will result in initial proceeds of $22.7 million. Meanwhile, 300,000 shares of Preferred stock at a purchase price of $100 per share, yielding proceeds of $30 million.
The remaining 26.9 million shares of Common stock will be purchased at $1.76 per share but will not be finalized until the deal is reviewed by agencies such as the Committee on Foreign Investment in the United States, pending other approvals. This portion of the deal will yield $47.3 million. The Preferred stock brings more interesting developments to the table between the two companies. Foxconn will purchase the remaining Preferred stock shares, given that Lordstown achieves EV program funding milestones agreed upon by the companies. Foxconn and Lordstown did not disclose these funding milestones.
As a result of the investments, Lordstown and Foxconn are terminating their existing joint venture involving Lordstown EV Corporation and Foxconn EV Technology, Inc. All new project developments are expected to fall under Lordstown Motor Company. Daniel Ninivaggi, Lordstown’s CEO, commented on the new Foxconn investment, “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.“