GM loans company $ 40 million to acquire and re-equip Lordstown, Ohio plant
WASHINGTON (Reuters) – General Motors Co GM.N confirmed Monday that it has agreed to lend $ 40 million to an electric vehicle start-up to facilitate the acquisition of its closed Lordstown Assembly plant in Ohio.
Lordstown Motors Corp, 10% owned by Workhorse Group Inc WKHS.O, bought the plant and equipment for $ 20 million in November as part of its ambitious plan to start building electric pickup trucks by the end of 2020.
The loan deal, which was reported earlier Monday by the Youngstown Business Journal, was filed in Trumbull County last week.
Lordstown Motors worked on the engineering of the new truck, “Endurance”, and hired Rich Schmidt, former director of manufacturing at Tesla Inc, as director of production.
“We have structured the sales agreement to help support Lordstown Motors’ launch plans for the Endurance pickup,” said GM spokesman Jim Cain, who added that it “allows them to take ownership of the plant and cover some operating expenses while they undertake their fundraising. “
GM is not investing in the company, but Cain said GM’s funding could reach $ 50 million.
The fate of the sprawling Northeast Ohio plant has become a political lightning rod after GM announced its planned closure in November 2018, sparking condemnation from US President Donald Trump and many US lawmakers.
Lordstown CEO Steve Burns told Reuters last month he hopes pre-production prototypes will roll off the assembly line by April and begin production by November 2020 with an initial workforce of 400 hourly workers.
Burns said last month the company hopes to raise more than $ 300 million, the Business Journal reported. Burns told Reuters he had retained Ohio investment bank Brown Gibbons Lang & Co as part of his fundraising efforts.
GM and South Korean LG Chem 051910.KS announced Thursday that they would invest $ 2.3 billion to build an electric vehicle battery cell joint venture in Ohio, which will be one of the largest battery facilities in the world.
The plant, which will be built near the Lordstown complex, will employ more than 1,100 people, the companies said.
As part of the Lordstown sale, GM has the option of leasing land near the assembly plant that it could use for the battery plant.
Reporting by David Shepardson; Editing by Sonya Hepinstall