EV maker Lordstown plans to sue Foxconn over stake dispute

[June 09, 2023]  (Reuters) -Lordstown Motors said on Friday it plans to take legal action against major investor Foxconn to ensure that the Taiwanese contract manufacturer completes a planned purchase of nearly 10% of the electric vehicle startup's shares. 

Lordstown Motors and Foxconn logos are seen in this illustration taken, May 2, 2023. REUTERS/Dado Ruvic/Illustration/File Photo

The company said in a filing it believes Foxconn was unlikely to complete the promised purchase on the basis of a letter the contract manufacturer sent Lordstown earlier this month, in which the Taiwanese company said its reading of the investment agreement "would not allow for the adjustment of the number of shares to be purchased on account of the company's recent reverse stock split."

Lordstown in May announced a reverse stock split to meet Nasdaq listing norms and appease Foxconn, which has threatened to scrap a crucial $170 million funding for the struggling electric-vehicle maker. The 1:15 split was scheduled for May 24.

Foxconn did not immediately respond to a Reuters request for comment.

(Reporting by Tiyashi Datta in Bengaluru; Editing by Savio D'Souza and Nivedita Bhattacharjee)

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