Lordstown Motors Flags Crisis With ‘Going Concern’ Warning

(Bloomberg) — Lordstown Motors Inc., an electric-vehicle startup that just lately went public, might not have sufficient money to get its debut pickup truck to market and won’t survive the following 12 months if it could actually’t elevate extra extra capital.

“The company believes that its current level of cash and cash equivalents are not sufficient” to finish the event of its electrical automobiles and launch the Endurance pickup, Lordstown mentioned within the submitting Tuesday.

Lordstown is one among dozens of startups which have gone public up to now 18 months by merging with so-called clean examine corporations, often known as particular goal acquisition corporations, or SPACs. Some, like Nikola Corp. and Velodyne Lidar Inc., have had their founders ousted. Lordstown is the primary to say it’s working low on money.

Shares of Lordstown fell as a lot as 12% in prolonged buying and selling to $9.90 after the submitting. The inventory misplaced 16% to $11.22 on the shut of normal buying and selling Tuesday in New York.

The announcement marks the most recent setback for Lordstown, which in March disclosed a Securities and Exchange Commission probe of its operations. As just lately as a yr in the past, the startup, which operates out of a shuttered General Motors Co. plant in Ohio, was lauded by former President Donald Trump’s administration as a part of its drive to create manufacturing jobs.

The submitting follows feedback by Chief Executive Officer Steve Burns on the corporate’s first-quarter earnings name final month that Lordstown wants to lift extra money to fund the event of its Endurance pickup.

Cash Balance

In the submitting, Lordstown mentioned it has roughly $587 million in money and an gathered deficit of $259.7 million as of March 31, after reporting a first-quarter web lack of $125.2 million.

As a results of the money crunch, Lordstown is “evaluating various funding alternatives and may seek to raise additional funds through the issuance of equity, mezzanine or debt securities, through arrangements with strategic partners or through obtaining credit from government or financial institutions.”

The firm mentioned it could actually’t assure cash could be raised on favorable phrases.

Lordstown went public when it merged with DiamondPeak Holdings, in an October deal that netted the startup $675 million. The firm had no income and hadn’t accomplished manufacturing variations of the Endurance but.

The firm is making an attempt to construct a singular electrical pickup — with a motor at every wheel. That makes it an engineering problem. The firm was working with Elaphe Propulsion Technologies of Slovenia for the motors.

Short Seller

Lordstown was attacked by quick vendor Hindenburg Research in March with allegations that its know-how was flawed and that pre-orders for its truck have been nonbinding. The report additionally mentioned Burns had been compelled out of his former firm, electric-van maker Workhorse Group Inc. He left that firm in 2019 and based Lordstown Motors.

If the corporate fails, it is going to be one other darkish chapter within the decline and fall of GM’s former small-car plant in Lordstown. GM had been slicing manufacturing over a number of years as compact automobiles went out of favor. The plant was idled in 2019 and bought to Lordstown Motors.

President Trump assailed GM CEO Mary Barra over the closure of the plant, however held out hope {that a} purchaser might put it aside and preserve auto manufacturing in northeastern Ohio. GM is constructing a $2.2 billion battery plant with associate LG Chem in that area.

(Updates with monetary information within the seventh paragraph.)

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