Lordstown Motors (NASDAQ: RIDE ) revealed Thursday that the electric automaker has hit an impasse in discussions with Foxconn (TW: 2354 ) as the two companies seek a resolution regarding the terms of an investment agreement.
Under the terms of the original agreement, Foxconn was to invest $47M within 10 days of regulatory approval by the Committee on Foreign Investment in the United States. Since the approval was secured on April 25, Lordstown believes that Foxconn was due to make the investment by May 8. However, on April 21, Lordstown received a letter from Foxconn alleging that the startup was in breach of the deal because its stock had fallen under $1 per share for 30 consecutive trading days.
Lordstown also noted that Foxconn did not provide its approval of the electric vehicle program’s budget and EV program milestones by May 7. Lordstown said that means no assurances can be given that the two will reach a resolution on the matter or that any such resolution will allow the closing of the funding to occur on a timely basis.
"If the Subsequent Common Closing is further delayed or such fundings do not occur, the Company will be deprived of critical funding necessary for its operations. The Company is evaluating its legal and financial alternatives in the event a resolution is not reached."
Shares of RIDE are down 0.72% in mid-day trading on Thursday.
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