Lordstown Motors has got a lifeline after an investment firm agreed to buy up to $400 million of the struggling pickup truck manufacturer’s shares.
Yorkville Advisors will buy the stock for at least $7.48 a share, its closing price as of Friday, July 23. The hedge fund will then stand to make a handy profit if Lordstown’s shares rise. The deal still needs to be approved by current shareholders and once that happens, Yorkville will be able to purchase 35.1 million shares, or about 19.9 per cent of outstanding shares, over a three-year period.
Read Also: Lordstown Now Claims It Has Enough Money To Start Production In September
This deal comes at a tumultuous time for Lordstown Motors. Last month, Lordstown flagged survival problems and claimed that it would not be able to start production of the Endurance pickup truck unless it raised more money.
Soon after, Lordstown chief executive Steve Burns and chief financial officer Julio Rodriguez resigned from the company. The automaker didn’t officially say why the duo left but the resignations came shortly after Lordstown admitted to inaccuracies with the number of pre-orders it had received.
After Burns and Rodriguez left, the company’s new president, Rich Schmidt, expressed a more optimistic outlook for the start-up, claiming that it had enough money to begin producing the Endurance in September and the funds needed to last until May 2022. Schmidt also claimed the company will be able to make 15,000 pickups over the coming 24 months.
While this new deal is good news for Lordstown Motors, it is still being investigated by the Securities and Exchange Commission (SEC) over assertions that the company and Steve Burns overstated claims about interest in the Endurance. Federal prosecutors are also investigating the company’s pre-order claims and its merger with special purpose acquisition company DiamondPeak Holdings.
