- The electric truck manufacturer Lordstown Motors (RIDE) warned that it could file for bankruptcy if its funding deal with Foxconn does not come to fruition.
- Foxconn, a Taiwan-based electronics firm, made a deal to become Lordstown's largest shareholder but claimed that the EV maker was in breach of contract.
- Lordstown shares fell to an all-time low on May 1, 2023, in reaction to the news.
Shares of Lordstown Motors (RIDE) plummeted to an all-time low as the electric truck maker warned that it could go bankrupt if an expected funding deal from Foxconn doesn't materialize.
Lordstown said in a regulatory filing that Foxconn claimed the EV maker was in breach of contract over a deal signed in November for the electronics firm to buy up to $170 million in Lordstown stock, giving Foxconn a 19.3% stake in the company and making it Lordstown's largest shareholder.
Foxconn made an initial $52.7 million investment shortly after that. However, late in April, it argued that Lordstown violated the contract because it received a delisting notice from the Nasdaq after shares had fallen below $1 for 30 consecutive days. Foxconn added that, if the breach wasn't curtailed in 30 days, it would terminate the agreement.
Lordstown explained that, without the Foxconn money, the company "will be deprived of critical funding for its operations," and "may need to curtail or cease operations" and file for bankruptcy protection.
The news sent Lordstown Motor shares plunging 23% on May 1, and they've lost about 99% of their value since hitting their all-time high in February 2021.