Lordstown Motors Corp (RIDE.O) on Monday announced the sudden departure of its CEO and CFO, just days after the electric truck maker warned it might not have enough money to stay in business at over the next year, causing stocks to fall further. than 20%.
The resignations of founder and CEO Steve Burns and CFO Julio Rodriguez come as the company’s board of directors reported the findings of an internal investigation into allegations by short seller Hindenburg. Burns is Lordstown’s largest shareholder with a stake of over 26%, according to data from Refinitiv.
Lordstown admitted to overestimating the quality of the company’s electric truck preorders, but dismissed Hindenburg’s accusations that it overestimated the viability of its technology and misled investors about production plans as false. Goldman Sachs, who advised the blank check company that merged with Lordstown last fall and helped set up funding for the deal, declined to comment.
When it announced its IPO through a reverse merger last August, Lordstown said it had pre-orders for its Endurance van worth around $ 1.4 billion. After Hindenburg accused the company of misleading investors about the pre-orders, Lordstown said they were non-binding and has since said it has no binding orders.
The company has appointed the independent lead director, Angela Strand, as executive chairman to oversee the company’s transition until the appointment of a permanent CEO. She will appear in a media appearance Lordstown had scheduled for Burns and other leaders on Tuesday. Read more
âWe remain committed to achieving our production and marketing goals,â Strand said in a statement. Lordstown has not made Strand available for an interview.
Strand, 52, is the managing director of a consulting firm specializing in technology and business strategy, and has worked with fleets and fleet management companies, the types of clients Lordstown aims to gain after starting up. Endurance production in September.
RBC Capital Markets analyst Joseph Spak said Burns was not the right fit for Lordstown as he is trying to expand production and that a change in strategy could come with new leaders, jeopardizing the company advantage of being the first with an electric pickup on the market.
Lordstown has revealed that customer deliveries won’t begin until the first quarter of 2022, placing it just ahead of the spring launch of Ford Motor Co’s (FN) electric F-150 Lightning.
Becky Roof, who previously served as Acting CFO at numerous companies including Eastman Kodak (KODK.N) and Hudson’s Bay Co, has been appointed Acting CFO of Lordstown, effective immediately.
Lordstown also revealed in a regulatory filing that he had hired a unit of AlixPartners, a consulting firm known to help companies restructure their operations.
Since last week’s continuity warning and the free fall in its share price, the company has tried to allay some concerns by saying it was in talks with several parties to raise funds.
“It was untenable for the company to secure the necessary new capital with a management team widely seen as potentially not leading the company into the next era of its development,” Morgan Stanley analyst Adam Jonas said in a research note.
Lordstown and his fellow electric vehicle maker Nikola (NKLA.O), both of which went public through acquisitions by SPACS, have become the target of short seller Hindenburg. Both companies subsequently saw their CEOs resign.
In March, Hindenburg revealed that it had taken a short position in Lordstown shares, saying the company had misled consumers and investors.
Subsequently, the US Securities and Exchange Commission (SEC) asked the company for information about its SPAC merger and pre-orders of its vehicles.
Hindenburg Research founder Nathan Anderson said the news came as no surprise.
âToday’s disclosure largely verifies the concerns we have raised,â he said in an interview. “The two most senior executives do not resign when the allegations are unfounded.”
Our Standards: Thomson Reuters Trust Principles.