General Motors is making a $40 million loan available to Lordstown Motors Corp. to help the start-up buy GM’s shuttered plant in Lordstown, Ohio, and start building electric trucks.
“The transaction was structured to support LMC’s strategy to launch production of their Endurance pickup,” GM spokesman Jim Cain said in an email to the Free Press. “But we’re not commenting on the terms.”
Legal documents filed late last week and dated Nov. 7 said GM held an open-ended mortgage that enables Lordstown Motors to borrow up to $50 million from GM if necessary, the Business Journal Daily of Youngstown reported.
Terms for repayment were not disclosed on the mortgage document, but a separately filed memorandum said GM has an option to repurchase the facility and all transferred assets, and holds the option to lease 500,000 square feet of the factory and another 400,000 square feet of land.
Distrust in the ranks
GM sold the 6.2-million square-foot facility to Lordstown Motors Nov. 7 after idling the plant in March. It relocated most of the 1,600 workers there to other GM jobs in different states.
GM had built the Chevrolet Cruze subcompact car there, but in November 2018 the automaker said it would close four U.S. plants including Lordstown. It was ending production of some of its sedans as customer preference shifted to SUVs and pickups.
This latest news offers little comfort to some 400 former GM Lordstown workers who remain in the area, having taken a buyout rather than uproot their families to move to a GM job out of state.
“The vast majority of us who lived through this entire story since last November don’t trust GM,” said Tim O’Hara, UAW Local 1112 president in Lordstown. “There is a lot of suspicion that once it’s all said and done that GM itself will end up building electric vehicles in Lordstown after all its loyal employees and Local 1112 members had to move throughout the nation.”
Lordstown Motors said it will build the Endurance electric pickup using components licensed from Workhorse of suburban Cincinnati. The Endurance, which is expected to sell for about $50,000, is designed for fleet sales, the company said, and is a lightweight, all-wheel drive vehicle with a low center of gravity.
Lordstown Motors CEO Steve Burns told the Free Press that the new company wants to begin production by the end of next year and it will hire about 450 people initially and the workforce will be union.
More: GM sells its Lordstown Assembly plant to electric truck start-up
More: Lordstown Motors CEO says workforce will be union
GM’s plan for Lordstown
During UAW 2019 contract talks and a six-week nationwide strike this past fall, GM agreed to keep its Detroit-Hamtramck plant open and build an electric pickup and other electric vehicles there. But Lordstown and transmission plants in Warren and Baltimore all closed.
GM announced last week that it would partner with LG Chem to build batteries for electric vehicles in a factory to be located near Lordstown. It said that will create 1,100 jobs after it’s built later next year.
GM closed on the deal to sell Lordstown Dec. 5, records from the Trumbull County auditor said as reported by the Business Journal. The plant and adjoining five parcels of land sold for $20 million, it said.
But Lordstown Motors has a short timeline to retool the plant and start production because GM’s option to lease the facilities and land expires April 1, 2020, and the option to repurchase the assets expires May 30, 2020.
The lease options allow for four parcels of land to be combined with virgin land that “GM either owns next to the plant or could buy in connection” with its joint venture with LG Chem, Business Journal said.
According to Forbes in a Nov. 25 report, Lordstown Motors has retained Cleveland investment bank Gibbons Lang & Co. to help it raise $450 million. “The capital will be mostly equity but will also include a variety of debt instruments yet to be determined,” the magazine said.
Contact Jamie L. LaReau at 313-222-2149 or jlareau@freepress.com. Follow her on Twitter @jlareauan. Read more on General Motors and sign up for our autos newsletter.
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