Ohio-based Lordstown Motors (NASDAQ: RIDE ) revealed Friday plans to take legal action Foxconn (TW: 2354 ), one of its prominent investors. The objective of this lawsuit is to ensure that Foxconn fulfills its commitment to acquiring approximately 10% of the shares of this emerging electric vehicle company.
According to a recent filing, Lordstown Motors believes Foxconn is unlikely to fulfill its commitment to the share purchase. This belief stems from a letter sent by the Taiwanese contract manufacturer to Lordstown earlier this month. In the letter, Foxconn stated that the investment agreement "would not allow for the adjustment of the number of shares to be purchased on account of the company's recent reverse stock split."
Lordstown announced a reverse stock split in May in order to meet Nasdaq's listing rules and address concerns raised by Foxconn. Foxconn had threatened to withdraw its vital $170 million funding from the troubled electric vehicle manufacturer. The reverse stock split, scheduled for May 24, involved consolidating shares at a ratio of 1:15.
Shares of RIDE are up 0.31% in pre-market trading on Friday.
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