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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event
reported): February 29, 2024
LORDSTOWN MOTORS CORP.
(Exact name of registrant as specified in its
charter)
Delaware |
001-38821 |
83-2533239 |
(State or other jurisdiction
of incorporation) |
(Commission
File Number) |
(IRS Employer
Identification No.) |
2300 Hallock Young Road
Lordstown, Ohio 44481
(Address of principal executive offices,
including zip code)
Registrant’s
telephone number, including area code: (234)
285-4001
N/A
(Former name or former address, if changed since last report)
Check the appropriate box
below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following
provisions:
¨ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
|
Trading
Symbol(s) |
|
Name
of each exchange on which
registered |
Class A common stock, par value $0.0001 per share |
|
RIDEQ |
|
* |
Indicate by check mark whether the registrant
is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2
of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company ¨
If an emerging growth company,
indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
* The registrant’s Class A common stock began trading exclusively on the over-the-counter market on July 7, 2023 under the symbol
“RIDEQ.” The NASDAQ Global Select Market filed a Form 25 with the Securities and Exchange Commission on July 27, 2023 to remove
the registrant’s Class A common stock from listing and registration on the NASDAQ Global Select Market. Delisting became effective
ten days thereafter and deregistration under Section 12(b) of the Act became effective 90 days later.
Item 7.01 |
Regulation FD Disclosure. |
As previously disclosed,
on June 27, 2023 (the “Petition Date”), Lordstown Motors Corp., a Delaware corporation (the “Company”), and its
subsidiaries (collectively, the “Debtors”), commenced voluntary proceedings under chapter 11 (“Chapter 11”) of
the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The Chapter 11
proceedings are being jointly administered under the caption In re: Lordstown Motors Corp., et al., Cases No. 23-10831 through
23-10833 (the “Chapter 11 Cases”).
As also previously
disclosed, the Joint Chapter 11 Plan of Lordstown Motors Corp. and Its Affiliated Debtors and accompanying Disclosure Statement
Pursuant to 11 U.S.C. § 1125 with Respect to Joint Chapter 11 Plan of Lordstown Motors Corp. and Its Affiliated Debtors,
originally filed on September 1, 2023 and as amended through February 29, 2024 (and as may be further modified, supplemented, or
amended, the “Proposed Plan”) includes as a condition to confirmation of the Proposed Plan, that the Securities and
Exchange Commission (“SEC”) approve an offer of settlement (the “Offer”) submitted by the Debtors to resolve
claims relating to prior legacy issues at the Company, including the proof of claim that the SEC filed against the Debtors in the
amount of $45 million (the “SEC Claim”) on January 4, 2024. On February 29, 2024, the SEC approved and authorized the
entry of an administrative order with respect to the Company (the “Order”), to which the Company consented without
admitting or denying the Order’s assertions of factual findings.
The Order directs the
Company to cease and desist from committing or causing any violations and any future violations of Sections 17(a)(2) and 17(a)(3) of the
Securities Act of 1933, Sections 13(a) and 14(a) of the Securities Exchange Act of 1934, and Rules 12b-20, 13a-11, 13a-11, 14a-3 and 14a-9
thereunder. The Order also provides that the Company will be liable to pay disgorgement in the amount of $25.5 million, which amount shall
be deemed fully satisfied upon the occurrence of both of the following: (i) entry in the Chapter 11 Cases of an order confirming the Company’s
Proposed Plan, which provides for the Company to fund no less than $3.0 million, and up to $10.0 million, to resolve claims asserted or
that could have been asserted by the class in the action captioned In re Lordstown Motors Corp. Securities Litigation, Case No. 4:21-cv-00616
(DAR) pending in the U.S. District Court for the Northern District of Ohio (the “Ohio Securities Litigation”), and such Proposed
Plan having gone effective; and (ii) execution of a binding term sheet providing for the payment of no less than $15.5 million to resolve
claims asserted or that could have been asserted by the class in the action captioned In re Lordstown Motors Corp. Stockholders Litigation,
C.A. No. 2021-1066-LWW, pending in the Court of Chancery of the State of Delaware (the “Delaware Class Action Litigation”).
Pursuant to the Ohio Securities Litigation Settlement incorporated into the Proposed Plan, the Company would pay $3 million into escrow
on the effective date of the Proposed Plan (the “Effective Date”) for the benefit of the putative class members in the Ohio
Securities Litigation. In addition, such putative class members would be entitled to receive a portion of any proceeds from litigation
and other causes of action being retained by the Company following the Effective Date (net of actual reasonable costs incurred in prosecuting
such retained causes of action) in an amount equal to the lesser of (a) 25% of such net proceeds, and (b) $7 million. With respect to
the Delaware Class Action Litigation, the parties to that action have executed a binding term sheet that the SEC has confirmed satisfies
the criteria set forth in the Order. The Company is not a party to the Delaware Class Action Litigation, the term sheet, or any settlement
thereof; however, the former directors of DiamondPeak (predecessor to the Company), including a current director, who are defendants in
the Delaware Class Action Litigation, have filed proofs of claim asserting indemnification claims against the Company and it is anticipated
that such former directors will seek indemnification from the Company with respect to $3.5 million of the settlement amount plus legal
fees and expenses incurred in connection with the Delaware Class Action Litigation. The amount and treatment of those claims, and any
objections thereto, have not been determined or resolved.
The Order also provides
that upon satisfaction of this disgorgement requirement, the SEC will promptly (and, in any event, no later than within 3 business days
following satisfaction of such requirement), file a notice in the Bankruptcy Court withdrawing any proofs of claim filed in the Chapter
11 Cases.
The Offer, Order and
Proposed Plan remain subject to Bankruptcy Court approval. A hearing before the Bankruptcy Court to consider confirmation of the Proposed
Plan is currently scheduled for March 5, 2024, at 3:00 p.m. (Eastern Time).
The provisions of (and
information contained in the Proposed Plan) are subject to change, whether as a result of amendments, supplements, or other modifications
to the Proposed Plan, third-party actions, or otherwise. The Proposed Plan is not binding on any party, including the Debtors, unless
and until it is confirmed by the Bankruptcy Court and consummated (such consummation date, the “Effective Date”).
The description of the
Proposed Plan, the Offer and the Order included in this Current Report is qualified in its entirety by reference to the Proposed Plan,
the Offer and OIP, which can be accessed, as well as other Bankruptcy Court filings and further information about the Chapter 11 Cases,
free of charge at a website maintained by the Company’s claims, noticing, and solicitation agent, Kurtzman Carson Consultants LLC,
at www.kccllc.net/lordstown. The information in that website or available elsewhere is not incorporated by reference and
does not constitute part of this Form 8-K.
Cautionary Note
Regarding Trading in the Company’s Class A Common Stock
The Company’s stockholders
are cautioned that trading in shares of the Company’s Class A common stock during the pendency of the Chapter 11 Cases and after
the Effective Date remains highly speculative and will pose substantial risks. Trading prices for the Company’s Class A common stock
may bear little or no relation to actual value, if any, remaining for holders thereof following the Chapter 11 Cases and the trading market
(if any) may be very limited. In addition, the Proposed Plan includes the NOL Trading Restrictions, which are designed to enable the Company
to optimize its tax attributes following the Effective Date and generally restrict transactions involving any person or group of persons
that is or as a result of such a transaction would become a substantial stockholder (i.e., would beneficially own, directly or indirectly,
4.5% or more of all issued and outstanding shares of Class A common stock). Accordingly, the Company urges extreme caution with respect
to existing and future investments in its Class A common stock.
Forward-looking
Statements
This report includes
forward looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation
Reform Act of 1995. These statements may be identified by words such as “feel,” “believes,” “expects,”
“estimates,” “projects,” “intends,” “should,” “is to be,” “may,”
or the negative of such terms, or other comparable terminology. Forward-looking statements are statements that are not historical facts.
Such forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, which could cause
actual results to differ materially from the forward-looking statements contained herein due to many factors. In addition, even if our
results of operations, financial condition and liquidity, business developments and available financing, are consistent with the forward-looking
statements contained in this report, those results or developments may not be indicative of results or developments in subsequent periods.
Upon confirmation by the Bankruptcy Court in the Chapter 11 Cases and effectiveness of the Proposed Plan or any alternative plan of reorganization,
a new board of directors (the “New Board”) and entirely new management appointed by the New Board will oversee and manage
the affairs of the Company. The current management and board of directors can provide no assurances as to what actions the New Board and
management will take. Actual results may differ materially from those contained in forward-looking statements due to various factors,
including, but not limited to, with respect to the matters addressed in this report, the risks and
uncertainties regarding:
| · | our
ability to have the Proposed Plan confirmed by the Bankruptcy Court in the Chapter 11 Cases
and, if confirmed, to become effective and successfully complete the Chapter 11 Cases by
consummating the Proposed Plan, which gives effect to proposed settlements for various matters,
including with the SEC, the Ohio Securities Litigation and with the equity committees and
unsecured creditors committee and is subject to the satisfaction of certain conditions precedent
(some of which are beyond our control), appeal by certain parties that could file notices
of appeal with respect to the confirmation order, if entered, and is otherwise subject to
the risks and uncertainties set forth in the disclosure statement for the Proposed Plan,
which stakeholders are encouraged to read in its entirety; |
| · | our
ability to continue as a going concern and the adequacy of our liquidity and capital resources
to maintain our limited expected operations upon our emergence from the Chapter 11 Cases,
which includes administering the claims process under the Proposed Plan, pursuing litigation
against Foxconn and other potential claims, identify and consummate a business combination
and seeking to realize value, if any, from our tax attributes, whether our cash on hand and
other resources will be sufficient to allow us to conclude the terms of the Proposed Plan,
satisfy the conditions of the Offer and Order and any remaining or future obligations related
to the Chapter 11 Cases or other current or future litigation, claims and liabilities, and
our unlikely access to financing; |
| · | uncertainty
as to whether our claims reserve, cash on hand, or proceeds generated from other assets (including
any acquired after the Effective Date), if the Proposed Plan is confirmed) will be sufficient
to pay all allowed claims and uncertainties regarding the amount of claims allowed for distributions
under the Proposed Plan and that such claims will not be significantly greater than may be
anticipated, as such estimated amounts are subject to significant risks, uncertainties and
assumptions; |
| · | the
impact of any contingent liabilities, including indemnification obligations (including the
fact that there are claims asserted for unliquidated damages or claims in respect of certain
indemnification obligations or otherwise that we may not be able to estimate, or may be materially
more than we estimate), any pending or future litigation or claims, as well as any regulatory
action, not discharged in the Chapter 11 Cases, and any additional claims that may be filed
in the Chapter 11 Cases, and the potential unavailability of insurance coverage with respect
to such litigation or claims, adverse publicity with respect to these matters, as well as
the significant ongoing costs associated with such litigation; |
| · | the
impact of the Bankruptcy Court’s ruling on the United States Trustee’s objection
to the Debtors’ entitlement to a discharge under the Bankruptcy Code from substantially
all debts arising prior to consummation of the Proposed Plan, which could, if sustained by
the Bankruptcy Court, result in the Proposed Plan not being confirmed or additional material
costs, penalties, fines, sanctions, or injunctive relief against the Debtors for claims that
are not ultimately discharged; |
| · | uncertainty
as to any remaining or future value of our Class A common stock or Preferred Stock, which
may have little or no value; |
| · | uncertainty
as to whether the Preferred Stock will retain its liquidation preference, which, if due and
payable, would entitle it to receive proceeds ahead of holders of Class A common stock until
such liquidation preference is satisfied and, if such preference is not subordinated or otherwise
set aside, whether Foxconn will successfully assert a claim that such preference is due and
payable, which would likely exhaust the Company’s remaining resources and cause it
to cease operations; and |
| · | uncertainty
with respect to the operations of the Company upon emergence from bankruptcy that will be
overseen by the New Board and an entirely new management appointed by the New Board, as contemplated
by the Proposed Plan, for which there will be limited resources, new and continuing liabilities
(including indemnification obligations to directors and officers), and significant costs
that may require additional capital to be raised (including through indebtedness obligations
or securities, which could be senior in priority to our Class A common stock or Preferred
Stock). |
Additional information on potential factors that could affect the
Company and its forward-looking statements is included in the Company’s Form 10-K, Form 10-Q and subsequent filings with the
SEC. In light of these risks and uncertainties, we caution you not to place undue reliance on any forward-looking statements and the
periodic financial information reported to the Bankruptcy Court which is not presented in accordance with GAAP and may differ
materially from information that has been or may in the future be provided in our periodic SEC filings and may reflect estimates
based on assumptions that may change significantly during the course of or following the Chapter 11 Cases or due to other
contingencies (and which is also subject to the further qualifications provided therein with respect thereto). All forward-looking
statements are qualified in their entirety by this cautionary statement. Any forward-looking statements speak only as of the date on
which they are made, and the Company undertakes no obligation except as may be required under applicable securities laws to update
any forward-looking statement to reflect events or circumstances after the date of this report.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
LORDSTOWN MOTORS CORP. |
|
|
|
|
By: |
/s/ Adam Kroll |
|
Name: |
Adam Kroll |
Date: March 1, 2024 |
Title: |
Chief Financial Officer |
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