Lordstown opts for reverse stock split to meet Nasdaq rules, placate Foxconn

Illustration shows Lordstown Motors logo
Lordstown Motors and Foxconn logo is seen in this illustration taken, May 2, 2023. REUTERS/Dado Ruvic/Illustration

May 23 (Reuters) - Lordstown Motors Corp (RIDE.O) on Tuesday announced a reverse stock split to meet Nasdaq listing norms and appease investor Foxconn (2317.TW), which has threatened to scrap a crucial $170 million funding for the struggling electric-vehicle maker.

The 1:15 split has been scheduled for May 24, the company said, but added there was no assurance that the Foxconn deal will close.

Lordstown Motors' shares fell 10% in premarket trading to $0.26, slipping further below the $1 minimum listing requirement of the Nasdaq.

Foxconn did not immediately respond to a request for comment.

The company had earlier this month warned it might be forced to file for bankruptcy due to uncertainty over the investment from Foxconn.

A year ago, the startup completed a deal to sell its Ohio factory for $230 million to Foxconn, excluding some assets.

Lordstown Motors and its EV peers have been struggling with dwindling cash balances and production challenges as access to capital tightens amid a looming recession and economic uncertainty.

Earlier this month, the company said it might have to stop making the Endurance pickup truck in the near future unless it finds a partner.

The EV startup had previously raised doubts about its ability to continue as a "going concern" as it was running low on cash balances.

Lordstown Motors, named after the town in which it is based, said it had cash, cash equivalents and short-term investments of about $165 million, down $11 million from a month earlier.

Reporting by Akash Sriram in Bengaluru; Editing by Arun Koyyur

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