Shortly thereafter, GM found a buyer who promised to return auto jobs to the region: Steve Burns, chief executive officer of A small electric-van business, Workhorse Group. That company had a rough design for electric pickup trucks and electric helicopters.
Mr. Burns decided to form a new company to leave workhorses to build trucks, and he Agreed to buy Lordstown plant For his new venture at just $ 20 million.
But the deal was announced in such a hurry – with Mr. Trump saying on Ms. Barra’s Twitter, “I told him to sell it or do something quickly” – Mr. Burns didn’t even have a name for his new company to buy the factory. With the money, he turned to a small Cleveland investment bank, Brown Gibbons Lang & Co., and received an investment from GM, which provided a $ 40 million loan for the purchase of the factory and other expenses.
In August, Lordstown Motors announced that it was merging with SPAC, Diamondpeak Holdings. That deal, Completed in Only two months, helped the company avoid the five to seven years it usually takes a start-up to establish a track record for an initial public offering. For example, Tesla went public almost seven years after its inception.
Spruce Point Capital Management founder Ben Axler said many companies were being pressured by SPAC supporters, known as sponsors, to go public before they were ready. Mr. Axler has placed bets against shares of some companies that have merged with SPAC, although he has not placed bets against Lordstown.
“We’re seeing evidence,” he said, “that SPX are paying for low-quality businesses.”
Lordstown’s lack of seasonings should have been obvious.
In a presentation to investors, Lordstown indicated that it relied on partners and suppliers, including workhorse, for most of its technology and key components. But a partnership has already soured: Karma Automotive has sued Lordstown, Accusing it of stealing trade secrets and trying to lure key employees.