Lordstown opts for reverse stock split to meet Nasdaq rules, placate Foxconn

(Reuters) -Lordstown Motors Corp on Tuesday announced a reverse stock split to meet Nasdaq listing norms and appease investor Foxconn, which has threatened to scrap a crucial $170 million funding for the struggling electric-vehicle maker.

The 1:15 split has been scheduled for May 24, the company said, but added there was no assurance that the Foxconn deal will close.

Lordstown Motors’ shares fell 10% in premarket trading to $0.26, slipping further below the $1 minimum listing requirement of the Nasdaq.

Foxconn did not immediately respond to a request for comment.

The company had earlier this month warned it might be forced to file for bankruptcy due to uncertainty over the investment from Foxconn.

A year ago, the startup completed a deal to sell its Ohio factory for $230 million to Foxconn, excluding some assets.

Lordstown Motors and its EV peers have been struggling with dwindling cash balances and production challenges as access to capital tightens amid a looming recession and economic uncertainty.

Earlier this month, the company said it might have to stop making the Endurance pickup truck in the near future unless it finds a partner.

The EV startup had previously raised doubts about its ability to continue as a “going concern” as it was running low on cash balances.

Lordstown Motors, named after the town in which it is based, said it had cash, cash equivalents and short-term investments of about $165 million, down $11 million from a month earlier.

(Reporting by Akash Sriram in Bengaluru; Additional reporting by Ben Blanchard in Taipei; Editing by Arun Koyyur and Saumyadeb Chakrabarty)