The former chief executive of Lordstown Motors Corp., Steve Burns, is no longer a shareholder in the company he founded to mass produce battery-powered work trucks after his latest stock selloff.
According to a regulatory filing Wednesday, Burns sold his remaining shares in three transactions since May 23, including two that happened after a reverse stock split on May 24, netting the Cincinnati-area resident more than $3.8 million.
All told, since Burns started unloading shares in the company in November 2021, he took away about $66 million.
The filing with the U.S. Securities and Exchange Commission shows Burns sold 581,000 shares on May 23 at 27 cents per share for $156,870.
On May 24 — the day of the 1:15 split — Burns sold 200,000 shares at $3.74 per share for $748,000 and on June 16, he sold the last 591,752 shares at $4.99 per share for more than $2.9 million.
Burns abruptly resigned in June 2021 without reason from Lordstown Motors, but his departure was in sync with an admission by the company that statements on preorders for the company’s first vehicle, the Endurance, were inaccurate.
Under the new leadership, the company sold the plant to global electronics and technology firm Foxconn for $230 million last year and has shifted away from manufacturing toward engineering and developing electric vehicles.
It recently has been in a dispute with Foxconn over future investments that started with a delisting notice from Nasdaq that resulted in shareholders approving the stock split as a means to pump up the company’s sagging stock price.
The latest turn had Lordstown Motors threatening to sue Foxconn if the company didn’t follow through on a $170 million investment agreement, which the EV startup has said is critical to its survival.
In a June 9 regulatory filing, Lordstown Motors stated it “intends to enforce its rights through litigation” if a “prompt resolution” with Foxconn isn’t achieved over closing on about $47.3 million in Lordstown Motors Class A common stock.
The dispute between the companies goes back to April when Lordstown Motors received a delisting notice from Nasdaq, stating the company’s stock had fallen below the minimum bid price requirement of $1 per share for 30 consecutive trading days.
That triggered a letter from Foxconn stating it believed Lordstown Motors, because of the notification from Nasdaq, had breached the investment agreement. Later, Foxconn indicated to Lordstown Motors it did not intend to close on the $47.3 million stock purchase, according to yet another regulatory filing.
To pump up the value of its stock to come back into compliance with Nasdaq rules and perhaps persuade Foxconn to follow through on the stock acquisition, Lordstown Motors, with shareholder approval, performed a reverse 1:15 stock split on May 24.
Nasdaq later informed Lordstown Motors it was back in compliance, however, the company also received a letter from Foxconn stating the investment agreement would not allow for the adjustment of the number of shares to be purchased because of the stock split, according to the June 9 filing.
It states Foxconn’s interpretation of the agreement is that it gives the company the right to acquire more than 60 percent of the Class A stock for the $47.3 million.
Before the split, the $47.3 million investment would have bought Foxconn about 10 percent of Lordstown Motors’ Class A common stock.
Lordstown Motors disagrees with Foxconn’s interpretation.
