The founder and former CEO of Lordstown Motors Corp. has, along with the company’s former finance chief, struck an agreement to buy many of the assets of the electric pickup truck manufacturer out of bankruptcy court.
Steve Burns, through his entity LAS Capital, and Julio Rodriguez on Sept. 29 finalized their deal to pay Lordstown $10 million in cash for most of the company’s completed vehicles, its hub motor and battery module assembly lines, other machinery, intellectual property, and related assets. LAS Capital, where Lordstown said in a regulatory filing Rodriguez is “one of the indirect managers,” has deposited a $1 million down payment and pledged to pay Lordstown another $4 million if it breaches certain terms of its purchase plan.
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Burns, who founded Lordstown in 2019, and Rodriguez both resigned in June 2021 after an internal investigation found that he and other executives had made misleading statements about preorders for the Endurance truck then in development. Burns owned about a quarter of Lordstown’s stock at the time but liquidated those shares before the company filed for bankruptcy protection in late June.
Lordstown struggled, as have several other electric vehicle startups, to ramp up its operations and bring the Endurance to market in serious numbers. After launching commercial production in the third quarter of last year, it delivered just 33 of its trucks focused on commercial users this spring. The executive teams that took over from Burns and Rodriguez partnered with Foxconn nearly 18 months ago in a deal that had the contract manufacturer buy Lordstown’s former General Motors plant and pledge additional financial support to get the startup to scale. But the partnership soured before it could truly materialize and the two sides are now in court.
LAS Capital’s plan to buy most of Lordstown’s assets will get a sale hearing Oct. 18. The $10 million offer—which amounts to about 0.5% of Lordstown’s market capitalization around the time Burns exited the company—was the only bid that met the auction parameters laid out by Lordstown’s board of directors. In their regulatory filing, company officials said they had “received several non-binding proposals for the purchase of specified assets” but called off the planned auction when LAS Capital’s offer was the only one to qualify under the bid procedures.
This story originally appeared on IndustryWeek.com.
