Lordstown Motors becomes latest EV automaker to use a SPAC to go public – ProWellTech
Lordstown Motors, The one-year-old Ohio electric automaker that unveiled a pickup truck prototype in June reached an agreement to merge with the special acquisition company DiamondPeak Holdings Corp., with a market value of $ 1.6 billion.
The deal marks the latest company – and the electric car maker – to become a publicly traded company through a merger deal with a SPAC, or blank check company. Electric car manufacturers Nikola Motor and Fisker Inc. have also become public companies through a SPAC in the past two months. Shift Technologies, an online used car market and sensor company Velodyne Lidar, also went public via a SPAC, avoiding the traditional IPO path.
In the latter SPAC, the combined company will remain on the Nasdaq with a new ticker symbol, RIDE. DiamondPeak Holdings Corp. was publicly traded under the DPHC ticker.
The company said it had been able to raise $ 500 million in private investment in public shares, or PIPE, including a $ 75 million investment by General Motors. Other institutional investors that have joined include Fidelity Management & Research Company, Wellington Management Company, Federated Hermes Kaufmann Small Cap Fund and funds and accounts managed by BlackRock.
The transaction is expected to close in the fourth quarter of 2020. The combined company’s new board of directors will include Steve Burns, founder and CEO of Lordstown, and David Hamamoto, president and CEO of DiamondPeak.
SPACs have been around for decades and have taken on different names, including “blind pools” and “clean roofing companies” and “blank check companies”. A SPAC is a company that has no defined business plans or purposes other than to raise funds from public markets to acquire a private company. SPAC saw a recovery in 2020, particularly in the second and now third quarter.
Lordstown has an interesting history for such a young company. Lordstown Motors is a derivation of Burns’ other company, Workhorse Group, an electric battery-powered transportation technology company that is also a publicly traded company. The work horse is a small company founded in 1998 and which has struggled financially in various places. Its derivation, Lordstown Motors, has revealed a prototype of an electric pickup truck called Endurance which is aimed at contractors and other buyers in the commercial market.
The plan is to produce 20,000 of these electric commercial trucks every year, starting in the second half of 2021, at the former GM assembly plant in Lordstown, Ohio. Lordstown Motors acquired the 6.2 million square foot factory from GM in November.
The combined company plans to use approximately $ 675 million in gross proceeds from the SPAC transaction to finance Endurance production. Since the truck’s presentation, the company has gotten $ 1.4 billion in pre-orders (or about 27,000 total pre-orders), according to Burns.