The soap opera that is Lordstown Motors is taking yet another unusual turn. The company founder and former CEO is paying $10 million to buy the electric pickup maker’s assets out of bankruptcy.
Lordstown’s “selling entities” said in a Securities and Exchange Commission filing Friday that Steve Burns made the only qualified bid for the assets. Burns founded the company in 2019 and brought it public through a merger with a special purpose acquisition company in 2020.
Burns and former Chief Financial Officer Julio Rodriguez left the company in June 2021 after an internal investigation found truth to a short seller’s allegations that Burns was responsible for inflating order estimates for the Endurance commercial pickup truck.
“It’s just as doomed as ever,” Sam Abuelsamid, principal analyst for Guidehouse Insights, told FreightWaves on Monday. “I have no more confidence that Lordstown will gain any market traction than I did yesterday.”
Lordstown manufactured and sold a few dozen trucks that were involved in two safety recalls. Its hope to carve out a piece of the commercial work truck space never materialized, especially in the face of competition from legacy automakers like Ford and even GM.
Burns sold tens of millions in Lordstown shares
Following the SPAC merger with DiamondPeak Acquisition Corp. in October 2020, Burns had about 25% of the company stock. He began selling his shares as soon as a lockup expired. Burns eventually pocketed more than $60 million from share sales, including a large sell-off days before Lordstown filed for Chapter 11 bankruptcy in June.
It is unclear what assets Burns will get since the plant complex itself is owned by Taiwan’s Foxconn. The electronics giant, best known as a maker of Apple phones, purchased the complex from Lordstown for $230 million in May 2022. Foxconn obtained contract manufacturing rights to the Endurance as part of the plant purchase.
According to the SEC filing, Burns’ entity LAS Capital “agreed to acquire specified assets of the selling entities related to the design, production and sale of electric light duty vehicles focused on the commercial fleet market.”
Burns did not immediately return a call from FreightWaves seeking comment.
“There’s only soft tooling there. Maybe they could build a couple hundred more trucks, but that’s it,” Abuelsamid said. “And nobody’s going to buy them.”
Burns paid $1 million into an escrow fund. If the deal does not go through this month, he could be on the hook for an additional $4 million.
A long shot to save Lordstown plant
A former CEO of Workhorse Group, Burns in 2019 persuaded General Motors Co. to effectively give him its 6.2 million-square-foot complex in the northeast Ohio town of the same name. GM had built cars there from 1966 through March 2019 when it idled the plant.
The fate of Lordstown became a political football when former President Donald Trump tweeted that GM CEO Mary Barra should find a new product for the plant. Trump won Ohio in the 2016 election in part because of labor support, including Mahoning Valley autoworkers.
The UAW unsuccessfully bargained to keep the plant open. It was an issue in a 40-day national strike in September and October 2019. After the strike, GM agreed to lend Burns $20 million to retool the plant and carry a mortgage for him. It later invested $25 million in Burns’ venture. GM divested its interest in Lordstown in 2022.
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