© Reuters. Undated handout picture of the Lordstown Endurance electric pickup truck. Lordstown Motors / Lisa Acierno / Handout via REUTERS
By Subrat Patnaik and Ben Klayman
(Reuters) – Lordstown Motors Corp announced on Monday the sudden departure of its chairman and chief financial officer, just days after the electric truck maker warned it may not have enough cash to stay in business for the next year, which made stocks up more than 15% in early trading.
Founder and CEO Steve Burns and CFO Julio Rodriguez resigned after the company’s board of directors released conclusions from an internal investigation into the claims of short seller Hindenburg. Burns is the largest shareholder in Lordstown, with a stake of more than 26%, according to refinitive data.
Lordstown acknowledged overrating the quality of pre-orders for the company’s electric trucks, but rejected Hindenburg’s allegations of overrating the profitability of its technology and misleading investors about production plans.
When Lordstown announced its IPO through a reverse merger last August, Lordstown announced it had pre-orders for its endurance pickup truck valued at approximately $ 1.4 billion. After Hindenburg accused the company of misleading investors about the pre-orders, Lordstown said they were non-binding and that no binding orders have been made since then.
The company appointed Angela Strand, Lead Independent Director, as executive chairman to oversee the company’s transition through the appointment of a permanent CEO. She will attend a media appearance on Tuesday that Lordstown had planned for Burns and other executives.
“We continue to strive to achieve our production and commercialization goals,” said Strand in a statement. Lordstown did not make Strand available for an interview.
Strand, 52, is the director of a technology and business strategy consultancy and has worked with fleets and fleet management companies, the types of customers Lordstown is looking to attract after starting endurance production in September.
Joseph Spak, an analyst at RBC Capital Markets, said Burns is not the right choice for Lordstown as it is trying to build up production and a change of strategy with new executives could ensue, jeopardizing the company’s advantage, the first with an electric pickup truck to be in the market.
Lordstown announced that customer shipments won’t begin until the first quarter of 2022, shortly before the spring launch of Ford Motor (NYSE 🙂 Co.’s electric F-150 Lightning.
Becky Roof, who previously served as interim CFO of numerous companies including Eastman Kodak and Hudson (NYSE 🙂 ‘s Bay Co, has been named interim chief financial officer of Lordstown effective immediately.
Lordstown also announced in a regulatory filing that it has hired a unit from AlixPartners, a consulting firm known for helping companies restructure operations.
Since last week’s going concern warning and a free fall in its share price, the company has tried to allay some worries by saying it is in talks with multiple parties to raise funds.
Lordstown and his e-car colleague Nikola, both of whom went public through takeovers by SPACS, have become the target of short seller Hindenburg. Both companies then saw their CEOs step down.
In March, Hindenburg announced it had taken a short position in Lordstown stock and said the company had misled consumers and investors.
The US Securities and Exchange Commission then asked the company for information on its SPAC merger and pre-orders for its vehicles.
Hindenburg Research did not immediately respond to a request for comment.