Lordstown Motors shares plunged 48% Monday after major shareholder Foxconn alleged it breached their $170 million investment deal and the electric truck maker warned it might be forced to file for bankruptcy.
Lordstown warned in a U.S. Securities and Exchange Commission filing on Monday that “there is substantial doubt regarding our ability to continue as a going concern.” Without a resolution with Foxconn, other funding or new partners, it could be forced to file for bankruptcy or cease operations, it added.
Lordstown said it was in talks with the Taiwanese contract manufacturer to seek a resolution.
It rejected Foxconn’s allegation of a breach of its agreement, saying the claim was based on a delisting notice Nasdaq had sent the Ohio-based automaker. Lordstown said last month the notice had no immediate impact on its stock listing and it had until Oct. 16 to regain compliance with Nasdaq’s rules.
“Foxconn’s actions are completely unwarranted. Their course of conduct has resulted in material — and what is becoming irreparable — harm to the company,” Lordstown said in a statement. “In the absence of a timely resolution, we will take all actions necessary to protect our business interests and enforce all of our rights and remedies.”
Foxconn did not immediately respond to a request for comment.
Lordstown shares were trading mid-afternoon at 27 cents, down 25 cents.
Foxconn in November struck a deal to take a near-20% stake in the money-losing U.S. electric truck maker for up to $170 million.
In May 2022, Lordstown completed a deal to sell its Ohio factory for $230 million to Foxconn, excluding assets such as the hub motor assembly and battery pack lines.
Lordstown said Foxconn had balked at purchasing $47.3 million in stock, which was supposed to occur soon after the Committee on Foreign Investment in the United States on April 25 concluded there were no unresolved national security concerns to the agreement.
Lordstown Motors bought a former General Motors Co small car assembly plant and equipment for $20 million in Ohio after the Detroit automaker closed it in March 2019.