Problems mount at startup Lordstown Motors
LORDSTOWN — The top two executives at Lordstown Motors have resigned as problems at the Ohio electric truck startup continue to mount.
CEO Steve Burns and Chief Financial Officer Julio Rodriguez stepped down, the company said Monday morning, sending shares already down 40 percent this year tumbling 16 percent at the opening bell.
The departures come less than a week after Lordstown cautioned that it may not be in business a year from now as it struggles to secure funding to begin full production. In a quarterly regulatory filing, the company said that the $587 million it had on hand as of March 31 isn’t enough to begin commercial production of its full-sized electric pickup, called the Endurance, at the former General Motors plant in Lordstown.
Yet Lordstown ran into trouble not long after it became a publicly traded company last year through a merger with a special-purpose acquisition company. Going public through a so-called SPAC is typically quicker than traditional initial public offerings that are usually handled by major financial institutions.
In January an Endurance pickup truck prototype caught fire 10 minutes into its initial test drive in Michigan. Then the company failed to pay $570,000 in real estate taxes due in early March.
Company shares have been on a sharp, downward trajectory since February and the stock fell below the initial public offering price of around $10 this morning.
Lordstown named lead independent director Angela Strand as executive chairwoman this morning and said that she will oversee the organization’s transition until a permanent CEO is found. Strand is the managing director of advisory firm Strand Strategy.
Becky Roof, who has been an interim chief financial officer at Eastman Kodak, Hudson’s Bay and Saks Fifth Avenue, was named interim CFO at Lordstown.
The company has hired an executive search firm to seek out a new CEO and chief financial officer.
Also Monday, the company responded to a scathing March report from the short-selling firm Hindenburg Research, which questioned the number of preorders the company claimed to have received for its marquee Endurance vehicle.
The report spawned four potential class-action lawsuits against Lordstown by investors who claim they were defrauded.
Lordstown said its independent investigation found that the vast majority of the Hindenburg report was unsubstantiated. However, it acknowledged that one potential buyer that made a large number of preorders doesn’t appear to have adequate resources to make those purchases. Other preorders appear too vague or weak to be relied on, the company said this morning.