Electric vehicle (EV) maker Lordstown Motors Corp (NASDAQ:RIDE) announced on Friday that it plans to take legal action against investor Foxconn to ensure that the Taiwanese electronics contract manufacturer completes a planned purchase of nearly 10% of Lordstown's shares.
Reuters reported that Foxconn, which owns a little more than 8% of Lordstown, has since invested $52.7 million and is balking at purchasing additional shares, citing a breach of their agreement, according to Lordstown.
In an earlier statement, cash-strapped Lordstown had warned it might be forced to file for bankruptcy, citing uncertainty over a $170 million investment deal with Foxconn through which the Taiwanese company would hold a nearly 20% stake in Lordstown.
In its court filing, Lordstown wrote that it believed Foxconn was unlikely to complete the promised equity purchase, citing a letter the contract manufacturer sent Lordstown earlier this month, in which Foxconn did not acknowledge the subsequent common closing.
In May, Lordstown announced that it might have to stop making the Endurance pickup truck in the near future unless it finds a partner.
Shares of Lordstown Motors rose 4% to $3.32 in early Friday trading, but have plunged more than 80% year to date.
Contact Sean at sean@proactiveinvestors.com