The soap opera that’s Lordstown Motors is taking yet one more unusual turn. The corporate founder and former CEO is paying $10 million to purchase the electrical pickup maker’s assets out of bankruptcy.
Lordstown’s “selling entities” said in a Securities and Exchange Commission filing Friday that Steve Burns made the one qualified bid for the assets. Burns founded the corporate in 2019 and brought it public through a merger with a special purpose acquisition company in 2020.
Burns and former Chief Financial Officer Julio Rodriguez left the corporate in June 2021 after an internal investigation found truth to a short seller’s allegations that Burns was accountable for inflating order estimates for the Endurance industrial pickup truck.
“It’s just as doomed as ever,” Sam Abuelsamid, principal analyst for Guidehouse Insights, told FreightWaves on Monday. “I actually have no more confidence that Lordstown will gain any market traction than I did yesterday.”
Lordstown manufactured and sold a couple of dozen trucks that were involved in two safety recalls. Its hope to carve out a bit of the industrial work truck space never materialized, especially within the face of competition from legacy automakers like Ford and even GM.
Burns sold tens of hundreds of thousands in Lordstown shares
Following the SPAC merger with DiamondPeak Acquisition Corp. in October 2020, Burns had about 25% of the corporate stock. He began selling his shares as soon as a lockup expired. Burns eventually pocketed greater than $60 million from share sales, including a big sell-off days before Lordstown filed for Chapter 11 bankruptcy in June.
It’s unclear what assets Burns will get for the reason that plant complex itself is owned by Taiwan’s Foxconn. The electronics giant, best referred to as a maker of Apple phones, purchased the complex from Lordstown for $230 million in May 2022. Foxconn obtained contract manufacturing rights to the Endurance as a part of the plant purchase.
In line with the SEC filing, Burns’ entity LAS Capital “agreed to accumulate specified assets of the selling entities related to the design, production and sale of electrical light duty vehicles focused on the industrial fleet market.”
Burns didn’t immediately return a call from FreightWaves searching for comment.
“There’s only soft tooling there. Possibly they might construct a pair hundred more trucks, but that’s it,” Abuelsamid said. “And no person’s going to purchase them.”
Burns paid $1 million into an escrow fund. If the deal doesn’t undergo this month, he may very well be on the hook for a further $4 million.
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An extended shot to save lots of Lordstown plant
A former CEO of Workhorse Group, Burns in 2019 persuaded General Motors Co. to effectively give him its 6.2 million-square-foot complex within the northeast Ohio town of the identical name. GM had built cars there from 1966 through March 2019 when it idled the plant.
The fate of Lordstown became a political football when former President Donald Trump tweeted that GM CEO Mary Barra should discover a recent product for the plant. Trump won Ohio within the 2016 election partly due to labor support, including Mahoning Valley autoworkers.
The UAW unsuccessfully bargained to maintain the plant open. It was a problem in a 40-day national strike in September and October 2019. After the strike, GM agreed to lend Burns $20 million to retool the plant and carry a mortgage for him. It later invested $25 million in Burns’ enterprise. GM divested its interest in Lordstown in 2022.
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