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LMC stockholders OK reverse stock split

News Team

Lordstown Motors Corp. stockholders are gambling on a reverse stock split to increase the value of the company’s deflated stock. 

It’s a move that, if successful, could bring the electric automaker back into compliance with Nasdaq trading rules and save a $170 million investment from Foxconn.

The 1:15 split of the company’s Class A common stock is scheduled for today, with trading on the split-adjusted basis to begin when the market opens.

Lordstown Motors on Tuesday, however, gave no assurance the split would cause share value to rise or whether it would persuade investor Foxconn to close on a stock purchase of about $47.3 million — funding critical to the survival of the startup.

If the split causes the stock to remain above $1 per share for 10 trading days in a row and Nasdaq notifies the company it is back in compliance with trading rules, “that may satisfy Foxconn’s (incorrect) interpretation of the closing condition and cause Foxconn to close the transaction,” a release sent Tuesday states.

Lordstown Motors and Foxconn in November signed a $170 million equity investment agreement that called for Foxconn to close on a second investment round on May 8, however, Foxconn notified Lordstown Motors on April 21 that because the company had fallen out of compliance with Nasdaq’s trading rules, it breached the agreement.

Nasdaq notified Lordstown Motors on April 21 it had fallen out of compliance with the exchange’s minimum bid price requirement by falling below $1 per share for 30 consecutive business days — from March 7 to April 18.

Lordstown Motors disagreed with Foxconn’s claim and was May 8, the release states, “ready, willing and able to close” on the agreement — a position the company remains in now.

“While the company (Lordstown Motors) remains willing to negotiate with Foxconn in an effort to resolve its disputes, no agreement currently exists and the company (Lordstown Motors) cannot predict whether such an agreement will be reached in the future,” the release states.


The split was approved by Lordstown Motors stockholders Monday at the company’s annual meeting.

The move will cause each 15 shares of the company’s issued and outstanding common stock to be combined into one issued and outstanding common stock. No fractional shared will be issued. Rather, stockholders who are entitled to a fractional share will receive cash equal to the fraction multiplied by the close price Tuesday, which was 28 cents per share. The stock traded down about 5 percent from open.

The split will not change the value or authorized number of shares of common stock nor the value, authorized or outstanding number of shares of the company preferred stock.

It’s a move that’s “intended to improve the marketability and liquidity” of the company’s common stock, the release states.

“A higher market price can make the Class A common stock more attractive to a broader range of institutional investors, professional investors and other members of the investing public” in addition to the intent of satisfying Nasdaq rules.


Since starting limited commercial production in November, Lordstown Motors has completed 56 battery-powered Endurance trucks and delivered 18, a dozen of them since resuming production in April.

The company announced in February it paused production after experiencing supplier parts quality issues that led to recalls of the truck in February and March. A third recall in April was because of a software malfunction.

“The Endurance continues to improve with each software update, and our team is encouraged by the most recent customer feedback. In light of the Foxconn dispute and the uncertainty regarding whether or to what extent Foxconn will fulfill its funding obligations under the investment agreement, the Company has taken aggressive actions to reduce costs and preserve liquidity,” the release states.

As of April 30, the company had cash, cash equivalents, and short-term investments of approximately $165 million, a decrease of approximately $11 million from the first quarter ended March 31.

Source: https://www.salemnews.net/news/local-news/2023/05/lmc-stockholders-ok-reverse-stock-split/