Lordstown Motors Corp has agreed in principle to sell a substantial stake in the company to Foxconn.
As per Bloomberg, the agreement will see Foxconn invest as much as $170 million through a purchase of preferred stock and 18.3 per cent of common shares.
As part of the agreement, Foxconn will receive two board seats.
The agreement will require review and approval by the Committee on Foreign Investment in the United States.
If the deal is approved, Foxconn can own up to 19.9 per cent of the common voting stock.
Per the agreement, Foxconn has a two-year standstill on buying new shares in the open market and agreed not to buy more stock without Lordstown’s approval.
If Foxconn wanted to buy more stock or take over the company, Foxconn would need to reopen negotiations with Lordstown.
This is the second major investment by Foxconn in Lordstown.
Last year, the Taiwanese company bought Lordstown‘s Ohio plant.
Lordstown Chairman Dan Ninivaggi said this in an interview with Bloomberg:
It’s strengthening the strategic partnership with Foxconn. It’s another step in that direction. It also provides us capital for our jointly developed EV program.
Lordstown has been having a tough year, with its stock down 39 per cent this year.
So the potential for new capital has investors and the company excited.
With the announcement of the potential deal, Lordstown stock jumped up as much as 29 per cent.