Shortly thereafter, GM found a buyer who promised to return auto jobs to the area: Steve Burns, the executive director of a small electric van company, the Workhorse Group. This company had a rough design for an electric pickup truck and an electric helicopter.
Mr. Burns decided to leave Workhorse to start a new company to manufacture the truck and agreed to buy the Lordstown plant for his new venture for only $ 20 million.
But the deal was announced so hastily – Mr. Trump had said on Twitter of Ms. Barra, “I asked her to sell him or do something quick” – that Mr. Burns doesn’t even have a name for his new company or that had money to buy the factory. He turned to a small Cleveland investment bank, Brown Gibbons Lang & Company, and secured an investment from GM that provided $ 40 million in credit for factory purchases and other expenses.
In August, Lordstown Motors announced the merger with a SPAC, DiamondPeak Holdings. This deal, which was closed in just two months, helped the company avoid the five to seven years that startups typically take to build a track record of going public. Tesla, for example, went public about seven years after it was founded.
Ben Axler, founder of Spruce Point Capital Management, said many companies were pressured by SPAC supporters, called sponsors, to go public before they were ready. Mr. Axler has bet against stocks of some companies that have merged with SPACs, even though he did not bet against Lordstown.
“We are seeing evidence,” he said, “that SPACs overpay for lower quality companies.”
Lordstown’s lack of spices should have been obvious.
In a presentation to investors, Lordstown stated that it relies on partners and suppliers, including Workhorse, for much of its technology and key components. One partnership has already deteriorated, however: Karma Automotive has sued Lordstown, accusing it of attempting to steal trade secrets and lure key employees away.