Business & Investment

Top executives of Lordstown Motors as SPAC-backed startup teaters

Top 2 Executives of Lordstown Motors CorporationNASDAQ: RIDE) Is the result of an internal investigation that found some truth in the short-selling Hindenburg Research’s allegations regarding fake pre-orders for commercial electric pickup trucks planned by the company.

Founder CEO Steve Burn and Chief Financial Officer Julio Rodríguez resigned last week Submission of “going concern” In collaboration with the Securities and Exchange Commission, he said startups may not be able to survive the year without additional funding to produce trucks.

Rhodestown shares fell more than 20% on Monday at $ 9.11 during the day.

White knight

Burns persuaded General Motors to establish Lordstown as a White Knight (NYSE GM) Sell to him a 6.2 million square foot Lordstown Assembly plant in a city in northeastern Ohio of the same name. GM idled a small car manufacturing plant in March 2019, causing the wrath of former President Donald Trump. Donald Trump urged CEO Mary Barra to look for new products in the factory.

As a face-saving move, GM sold its factory to Burns in November 2019. The automaker eventually invested $ 75 million in LMC through a factory’s $ 40 million mortgage, money for remodeling, and $ 25 million in cash.

Burns is a special purpose acquisition company (SPAC), Diamond Peak Holdings Corp, which has raised $ 780 million through “blank check” investors, hedge funds and investment groups. I found financial support through. SPAC is a shell company whose sole purpose is to merge with a small company that lacks the resources to pursue public ownership.

The reverse merger of LMC with Diamond Peak was completed in just 11 weeks. This is also quicker with SPAC standards, which are looser than traditional initial public offerings because they allow for future product and financial forecasts.

In April, the SEC began scrutinizing the SPAC, of ​​which 339 were launched this year, with total revenues in excess of $ 106 billion. According to SPAC Insider.

Diamond peak reversal

David Hamamoto, LMC’s board member, chairman and chief executive officer of Diamond Peak, appears to have deported Burns and Rodriguez.

It was a complete reversal from his comment.

“Lordstown’s top management team, led by Steve Burns, has paved the way for clear customers in the fleet market. The team’s extensive experience and track record in launching both traditional and electric vehicles, and The company’s strong strategic relationship gives Lordstown a unique competitive advantage. “

Rosetown appointed lead independent director Angela Strand as executive chairwoman to oversee the company until he found a replacement for Burns, who had given up on the board of directors in Rosetown.

“We continue to work to achieve our production and commercialization goals, maintain the highest standards of operation and performance, and create value for our shareholders,” Strand said in a statement. I am.

Burns Second Strike

Burns is a former CEO of the Workhorse Group, an electric truck maker, and was deported from Workhorse in February 2019. He founded LMC the following month and licensed Workhorse Technology as the basis for the planned endurance electric pickups. In exchange, Workhorse received a 10% stake in LMC and a royalties for certain vehicles.

LMC presented a rosy photo of a growing interest in trucks for several months, claiming that there were 100,000 pre-orders. The claim is March deletion Short-selling Hindenburg has created a survey that found that many pre-orders were non-binding intents from individuals or businesses that did not understand the signature.

Rosetown said a special committee reviewing Hindenburg’s allegations concluded that the findings of the research firm were “importantly false and misleading.” However, the Commission acknowledged that “Lordstown Motors made regular disclosures regarding certain pre-orders that were inaccurate.”

Hindenburg’s report led to the expulsion of the CEO in the second case. In a September 2020 report, Hindenberg blamed Nicola (NASDAQ: NKLA) Trevor Milton, founder of false claims about electric truck startups. He resigned 10 days later.

SEC under investigation

The SEC has sent two subpoenas to LMC asking about the order. An internal committee investigation criticized Hindenburg’s report, but found at least some truth in the inflated order claims.

The situation in Lordstown last month was Ford Motor Company (NYSE: F) Revealed that the 2022 F-150 Lightning Pickup Truck will sell for $ 12,000 below Endurance, boosted by automakers who have been leading full-size pickup sales for 44 consecutive years.

Lightning Strike: Lordstown Motors May Not Survive That Year

News analysis: Nicola torturer Hindenberg Research fires at Lordstown Motors

SPAC shareholders approve reverse merger of Lordstown Motors

Click here for more Freight Waves articles by Alan Adler.



Top executives of Lordstown Motors as SPAC-backed startup teaters

https://www.freightwaves.com/news/top-lordstown-motors-executives-out-as-spac-backed-startup-teeters Top executives of Lordstown Motors as SPAC-backed startup teaters

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