KABOOM: Lordstown Motors CEO and CFO Resign
Posted on 06/14/2021
Ohio-based Lordstown Motors Corporation said Monday that their CEO Steve Burns and CFO Julio Rodriguez have resigned. This is just days after the electric truck maker issued a warning about “substantial doubt” about its ability to continue as a going concern in the next year. Lordstown Motors became a publicly-listed company via SPAC route in October 2020 despite never selling one vehicle. Goldman Sachs was the exclusive financial adviser on the SPAC merger and placement agent on the PIPE. Lordstown Motors named Becky Roof as interim CFO, effective immediately.
Lordstown Motors said its lead independent director Angela Strand was named executive chairwoman and would oversee the firm’s transition until a permanent CEO is identified. From 2011 to 2015, Strand served as the chief marketing officer and head of business development and government affairs for Smith Electric Vehicles. Strand was a co-founder and senior executive of Chanje, a joint venture between Smith Electric Vehicles and FDG Electric Vehicles Ltd.
Short-seller Hindenburg Research looked into the company and found that it misled investors. There was an internal investigation of the company’s operations. The Securities and Exchange Commission (SEC) has opened an inquiry looking at Hindenburg’s claims as well as the company’s merger with SPAC DiamondPeak Holdings.
Hindenburg accused Lordstown in March 2021 of using “fake” orders to raise capital for its Endurance electric pickup. The short seller said the pickup was years away from production, but Lordstown Motors has maintained it’s on track to start making the vehicle in September 2021.
Lordstown Motors shares are down more than 40% this year. Lordstown Motors’ market cap is about US$ 2 billion. Named after an Ohio town of where its factory is based, Lordstown Motors acquired the plant from General Motors, which once produced small cars like the Chevrolet Cruze (4,500 workers were making it). Then U.S. President Donald Trump criticized General Motors CEO Mary T. Barra for closing an Ohio factory, the quick solution was to have a startup buy the factory. This startup acquired the closed GM factory in Lordstown. In November 2019, General Motors sold the factory for US$ 40 million (other numbers at US$ 16 million) to Lordstown Motors. GM had loaned Lordstown Motors to buy the factory.
Workhorse Group Incorporated is an American manufacturing company based in Cincinnati, Ohio, currently focused on manufacturing electric-powered delivery and utility vehicles. Workhorse Group has a 10% stake in Lordstown Motors. In February 2019, Steve Burns, co-founder and CEO of Workhorse decided to resign from the company.
A number of electric vehicle start-ups went public using SPACs. Nikola Chairman Trevor Milton, who was CEO ahead of the company’s June 2020 IPO, resigned in 2020 amid SEC inquires following a separate Hindenburg Research report that accused Milton and the company of misleading investors. Earlier, Nikola Corporation informed the public that it granted stock awards to executives in 2020 with a combined value of about US$ 567 million, intended as an “incentive for future performance.” The awards included US$ 159 million worth of stock to Trevor Milton.
Keywords: Nikola Corporation, Nikola Motor Company.