- Lordstown Motors Corp and special purpose acquisition company (SPAC) DiamondPeak Holdings Corp.(NASDAQ: DPHC) have announced they have entered into a definitive agreement for a business combination that would result in Lordstown becoming a publicly listed company
Lordstown Motors Corp — a leader in electric light-duty trucks — and special purpose acquisition company (SPAC) DiamondPeak Holdings Corp.(NASDAQ: DPHC) have announced they have entered into a definitive agreement for a business combination that would result in Lordstown becoming a publicly listed company. Upon closing of the deal, the combined company will be named Lordstown Motors Corp. and it is expected to remain listed on the NASDAQ and trade under the new ticker symbol “RIDE.”
The merger and the support of the company’s robust network of industry partners will drive the development and commercialization of Lordstown’s all-electric pickup truck called the Lordstown Endurance.
In November 2019, Lordstown purchased the former General Motors Lordstown Assembly Plant — which is a 6.2 million square foot facility estimated to be capable of producing in excess of 600,000 electric vehicles annually with only modest incremental investment.
Lordstown is believed to be one of the first electric vehicle manufacturers to buy a near production-ready plant. And the Lordstown complex provides Lordstown with critical flexibility and line-of-sight to production, immediate access to a well-trained, and highly capable workforce in Ohio’s Mahoning Valley. And it positions Lordstown to be first to market.
Lordstown unveiled the prototype of its flagship Endurance pickup truck on June 25, 2020. And to date, it has received more than 27,000 pre-orders for the vehicle representing over $1.4 billion of potential revenue, primarily from commercial fleet customers.
As evidence of the Endurance’s appeal to the commercial fleet industry customer base, Holman Automotive — of which ARI is the largest privately-held fleet management company in the world — has indicated very strong initial interest on behalf of their client portfolio. And the Auto Truck Group is exploring the potential for on-the-production-line upfitting and modifications within the Lordstown manufacturing plant.
The Endurance’s revolutionary use of an in-wheel hub motor design is expected to improve performance, efficiency, and safety while providing a significant reduction in the total cost of ownership. And Lordstown will be the only manufacturer of full-size electric pickup trucks focused exclusively on the large commercial fleet market and is expected to be the first to come to market with the innovative hub motor design.
The business combination values Lordstown at an implied $1.6 billion pro forma equity value at the $10 per share PIPE price and assuming minimal redemptions by DiamondPeak stockholders. And the boards of directors of both DiamondPeak and Lordstown have unanimously approved the proposed transaction — which is expected to be completed in the fourth quarter of 2020 subject to the approval by DiamondPeak’s stockholders and satisfaction or waiver of the other conditions stated in the definitive documentation.
The private placement of common stock includes commitments from institutional investors Fidelity Management & Research Company LLC, Wellington Management Company LLP, Federated Hermes Kaufmann Small Cap Fund, and funds and accounts managed by BlackRock among others. And the $75 million investment from General Motors includes certain in-kind contributions that have already been provided to Lordstown.
Goldman Sachs is serving as exclusive financial advisor and Sullivan & Cromwell LLP is serving as legal advisor to DiamondPeak. And Goldman Sachs is serving as exclusive placement agent on the PIPE offering. Deutsche Bank is serving as additional capital markets advisor to DiamondPeak. BakerHostetler is serving as legal advisor to Lordstown.
KEY QUOTES:
“We are thrilled with the opportunity to build Lordstown Motors into a top-tier electric truck company that is highly differentiated from the competition. We are uniquely positioned to be a leader in the industry, with our first vehicle, the revolutionary Lordstown Endurance. Our all-electric full-size pickup truck delivers the equivalent of 75 miles per gallon and has been systematically engineered and competitively priced specifically for the large commercial fleet market, which includes companies in manufacturing, contracting, utilities, transportation and delivery, and agriculture, among others. Since its unveiling just over a month ago, the Endurance has been met with enthusiastic support, and to date, we have secured $1.4 billion of pre-orders. Our platform is rooted in sustainability, and the entire Lordstown team is committed to ensuring we contribute to a healthier planet for generations to come.”
“The Endurance was constructed from the ground up with simplicity in mind. Equipped with hub motors in each wheel, and seamlessly integrated with our software system, we are effectively able to deliver a motor and mind in each wheel. Further, this design means that the Endurance has just four moving parts in the drivetrain, as compared to more than 2,000 in vehicles utilizing a traditional internal combustion engine. Together, this allows us to significantly increase reliability, maximize performance, and reduce total cost of ownership. Our streamlined and simplified design positions the Endurance to be one of the simplest and most cost effective vehicles on U.S. roads.”
— Steve Burns, Founder and Chief Executive Officer of Lordstown
“We have evaluated hundreds of companies for more than a year and Lordstown stood out as a differentiated, high growth company at the confluence of electric vehicles and light-duty trucks, two highly valuable areas of focus and tremendous opportunity in the automotive sector. Lordstown’s top-tier management team, led by Steve Burns, has captured a clear lane of customers in the fleet market. The team’s vast experience and track-record in launching both traditional and electric vehicles, as well as the company’s strong strategic relationships, provides Lordstown with a unique competitive advantage and positions the company to achieve its milestone of commencing production of the Endurance in the second half of 2021.”
— David Hamamoto, Chairman and Chief Executive Officer of DiamondPeak
