Why Selling Its Only Factory to Foxconn Could Be a Lifeline for Lordstown Motors
Looking to get its financial engine firing vigorously again, electric vehicle (EV) start-up Lordstown Motors (NASDAQ: RIDE) announced a tentative deal to sell most of its eponymous Lordstown facility to Foxconn (OTC: FXCNF). Foxconn is a Taiwanese electronics maker gaining an EV market foothold through partnerships with electric car companies like Fisker (NYSE: FSR). While the alliance is a gamble, it could free Lordstown from several current problems, explaining the stock market's enthusiastic response.
Speculation ran high on September 30 that troubled EV enterprise Lordstown Motors might be angling to sell its factory to Foxconn. A separate press release filled in details later that day. The Lordstown Complex, the pact's centerpiece, is a large factory compound that General Motors (NYSE: GM) opened in 1966. Production at Lordstown began tapering in 2016, and the factory closed in early 2019. In November 2019, Lordstown Motors bought the plant for an undisclosed amount, with GM lending it $40 million to help complete the acquisition.
Lordstown Motors' sale of the Lordstown Complex to Foxconn and other details is an "agreement in principle" at the moment. Hence, the two companies agree to negotiate further based on the general outline provided. So there's no binding contract yet, though remarks by both parties' executives point to strong interest in drafting one.
Source Fool.com
