Lordstown Motors remains concerned about its ability to stay in business, says chief financial officer

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its ability to stay in business for at least another year remains uncertain until it secures more financing and its market value increases, its chief financial officer said after the electric truck maker sold its plant to raise funds.

Lordstown, which aims to launch its first vehicle this year and is not yet generating revenue, issued a going concern warning in June 2021, signaling concerns about its financial health.

“It will be there until we raise enough capital and reach a higher market capitalization,” chief financial officer Adam Kroll said Monday, referring to the going concern warning. A business is considered a going concern unless management intends to liquidate it or cease operations.

Last week, the company said it reached a deal to sell its Lordstown, Ohio plant to subsidiaries of contract assembler Foxconn Technology Group..

Lordstown received $230 million for the plant, formerly a General Motors Co. manufacturing site, and was reimbursed about $27 million in operating and expansion costs by Taipei-based Foxconn. who had previously bought about $50 million in Lordstown stock.

Lordstown, which went public in 2020 through a merger with a special-purpose acquisition company, is testing the Endurance, its first vehicle, and intends to start commercial production in the third trimester.

Foxconn, formerly known as Hon Hai Precision Industry Co., will build the Endurance for Lordstown and has committed $100 million to a new joint venture between the two companies. The pledge includes a $45 million loan to Lordstown.

“We’re not a one-trick pony anymore,” Kroll said, outlining plans to develop more vehicles with Foxconn.

Lordstown needs to raise an additional $150 million in capital before the end of the year to execute its plans for 2022, which include building around 500 vehicles, Mr Kroll said. The company aims to have at least $75 million to $100 million in cash on its balance sheet by the end of this year, he said.

The company held cash and cash equivalents of $203.6 million at the end of the first quarter, up from $587 million a year earlier. Lordstown reported a loss of $89.6 million for the quarter, compared to a loss of $125.2 million in the same period a year earlier.

Lordstown could raise funds through a public or private offering to institutional investors, Mr Kroll said, adding that it could involve selling debt or shares. “There may be other things that might involve more strategic partners,” he said.

Management is working full steam ahead for the commercial launch of the Endurance, Kroll said, adding that it would be an important milestone for the company. “A big part of fundraising is throwing,” he said.

Lordstown may struggle to raise the funds it needs amid the recent market selloff, which has hit tech and other stocks hard. Shares of the company closed at $2.27 on Monday, down 7.4% for the day and 39% year-to-date. Its market cap was $448.1 million.

“We’re definitely in a risky environment for EV startups,” Kroll said. “I can’t predict if or when that might change.”

Analysts remain skeptical of the company’s outlook, pointing to issues such as fundraising and changing investor sentiment. “Ultimately, we see the way forward for [the company] more and more complicated”, Emmanuel Rosner, analyst at Deutsche Bank,

wrote in a note to clients last week.

Last year, Lordstown disclosed investigations by the Securities and Exchange Commission and the Department of Justice into its SPAC transaction and pre-order representations for the Endurance.

Earlier this month the company said it did not have enough cash to execute its business plan for the year. He said the situation raised significant concerns about his ability to continue in business.

“While we seek additional sources of funding, there can be no assurance that such funding would be available for use on concessional terms or at all,” Lordstown said in its quarterly report. The company also cited higher material costs and uncertainty around regulatory approval as risk factors, among others.

Write to Nina Trentmann at Nina.Trentmann@wsj.com

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