Lordstown Motors Corp. announced a definitive agreement for a business combination with DiamondPeak Holdings Corp. (a special purpose acquisition company), which will result in Lordstown becoming a publicly listed company on the NASDAQ under the new ticker symbol “RIDE”. The combined company will be named Lordstown Motors Corp.
The combinations like this are becoming more and more popular compared to traditional IPOs, and in the case of Lordstown Motors it should provide needed capital to introduce the Lordstown Endurance electric pickup on the market.
According to the press release, approximately $675 million of gross proceeds are expected from the transaction, which should close in the fourth quarter of 2020. By the way, GM is among the investors with $75 million:
"Transaction includes a $500 million fully committed PIPE, which includes $75 million of investments by General Motors in addition to investments from institutional investors, including Fidelity Management & Research Company LLC, Wellington Management Company LLP, Federated Hermes Kaufmann Small Cap Fund, and funds and accounts managed by BlackRock, among others"
Moreover, the pro forma implied equity value of the combined company is approximately $1.6 billion - not bad for a company that was barely launched.
The news about going public and new investors is not a surprise move. Actually, we were just asking the question and wondering who will invest at least three-digit number of millions in the project.
Lordstown Motors said that currently, it has some $1.4 billion in pre-orders (more than 27,000 Endurance vehicles) - "primarily from commercial fleet customers.".
Not all news iss positive. The latest announcement includes an update that the initial production is expected in the second half of 2021. That means a delay, compared to previous announcements:
- initial plan: start deliveries in December 2020
- updated plan after COVID-19: deliveries from January 2021
- mid-July 2020: Endurance is "scheduled to begin delivery to customers next summer"
- August 3, 2020: "initial production is expected in the second half of 2021" (no word about customer deliveries).
In other words, the deadline for customer deliveries is drifting away. There is not much space left as in 2021/2022 other manufacturers will be on the market with their electric pickups.
Lordstown Motors intend to produce the Endurance in the former General Motors Lordstown Assembly Plant, acquired in November 2019.
According to the press release the plant is "capable of producing in excess of 600,000 electric vehicles annually, with only modest incremental investment" although are highly sceptical whether really only modest incremental investment will be enough to launch successful electric pickups.