The electric automaker Lordstown Motors is planning to go public through a merger with a special purpose acquisition company (SPAC), DiamondPeak Holdings, the companies announced.
Under the deal, which implies a $1.6 billion valuation for the company, Lordstown Motors will receive $500 million in financing (through a private investment in public equity) from Fidelity, Wellington Management, the Federated Hermes Kaufmann Small Cap Fund, and funds managed by BlackRock. In a statement, Lordstown Motors said the deal will allow it to begin production of its flagship Endurance pickup truck in the second half of 2021.
The company said it has more than 27,000 pre-orders, representing more than $1.4 billion in potential revenue, for what it says will be the first full-size electric pickup truck to serve the commercial fleet market.
The Endurance’s estimated sale price is $45,000 net of a $7,500 tax credit.
David Hamamoto, Chairman and Chief Executive Officer of DiamondPeak, said: “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.”
The Lordstown plant was at the center of controversy over tens of millions of dollars in tax credits General Motors received in exchange for a commitment to keep the plant open. Last November, GM sold the 6.2 million square foot facility to Lordstown Motors. In March, the state of Ohio Development Services Agency, which oversees economic incentive programs, notified GM it planned to recommend that the tax agreements be terminated and the taxes be repaid.
On Monday, GM said it was investing $75 million, including “in-kind contributions that have already been provided,” in Lordstown Motors as part of the financing deal.
With the deal, Lordstown joins a number of firms that have opted to list by merging with an already public SPAC rather than through a more conventional public offering. Virgin Galactic, in April, raised $720 million through a SPAC listing with Chamath Palihapitiya’s Social Capital Hedosophia Holdings.
The financing deal is expected to be completed in the fourth quarter of 2020. DiamondPeak is changing its name to Lordstown Motors and changing its ticker to RIDE. It is listed on the Nasdaq.