Lordstown Motors, which has been struggling through a rocky start as an electric truck manufacturer, has named Adam Kroll as its CFO.
The 25-year finance veteran replaces Becky Roof, who’s been serving as interim CFO since June, when the company's then-CEO and CFO resigned following allegations they misled on how much pre-order demand the company had for its product.
“His deep understanding of the automotive industry and experience in financial operations and strategy will have an immediate impact,” said Dan Ninivaggi, the company’s CEO since late August.
Kroll has served as an investment banker at J.P. Morgan, where he advised companies on more than $125 billion in capital markets, loan and M&A transactions, mostly in connection with the auto industry.
In a statement, the company said Kroll also has a strong operational and strategic background, having served as chief administrative officer for Hyzon Motors, interim CFO for UPG Enterprises and senior vice president of finance for PSAV Holdings.
In remarks to The Wall Street Journal, Ninivagga described Kroll as checking “three boxes ... He is operational, he is strategic and he has experience in capital markets.”
Ninivagga credited Roof, who specializes in temporary assignments, with stabilizing the finance function at a time when its problems were great enough to prompt the company’s auditor to include a going-concern notice in its opinion.
The company launched in 2018 and raised $675 million two years later when it went public through a merger with DiamondPeak Holdings, a special purpose acquisition company (SPAC), which valued Lordstown at $1.6 billion.
Despite widespread attention on the electric vehicle space, the company has had trouble securing pre-orders for its first product, an all-electric light-duty truck called Endurance. Hindenburg Research, a short-seller, released a report about a year ago alleging the biggest pre-orders the company touted were non-binding and, in some cases, from buyers that didn’t have the means to make good on their intentions.
"After months of denials, Lordstown is finally beginning to acknowledge its precarious financial state and that its earlier production projections were nowhere close to reality," Hindenburg said in a statement at the time.
The Securities and Exchange Commission and the Department of Justice have each opened reviews into the matter.
The company is forecasting liquidity of between $225 million and $275 million in cash and cash equivalents by the end of the third quarter, and disclosed an equity purchase agreement worth $400 million, the Journal reported.
Under the agreement, the Journal said, a fund run by investment firm Yorkville Advisors Global committed to buying the company’s common stock over a three-year period.
To generate more cash, the company intends to sell its Lordstown, Ohio, factory, which it bought from GM and from which it gets its name, for $230 million. The buyer, Foxconn Technology Group, will also invest $50 million in stock and take over the manufacturing process, according to the Journal.
The arrangement could help the company solve its biggest problem, which is getting the trucks built. The original plan was to have trucks start rolling off the assembly line in September; now that’s not likely to happen until at least after April 2022, which is when the Foxconn deal is supposed to close.
“I am thrilled to be joining the Lordstown Motors team at this pivotal time,” Kroll said. “I look forward to [developing] our strategic partnership with Foxconn and executing on the company’s other key priorities. I believe LMC is uniquely positioned, with the team, the assets and focus to capitalize on the automotive industry’s transition to a better, greener future with the Endurance and other vehicles to come.”