LORDSTOWN — Electric vehicle startup Lordstown Motors Corp. will get a $675 million infusion to fund production of its Endurance pickup truck through a merger with a publicly traded special acquisition company.

The transaction jointly announced Monday by Lordstown Motors and New York-based DiamondPeak Holdings Corp. is expected to close sometime in the fourth quarter of this year. When it does, the new company will remain named Lordstown Motors Corp. and be traded on the Nasdaq exchange under the ticker, “RIDE.”

The deal includes a $500 million fully committed PIPE — private investment in public equity, which is a mechanism that allows institutional investors to invest in private companies — that includes a $75 million investment from General Motors.

Additional investors include Fidelity Management and Research Company LLC, Wellington Management Company LLP, Federated Hermes Kaufmann Small Cap Fund, and funds and accounts managed by BlackRock.

The implied equity value of the combined company is $1.6 billion.

“The cash proceeds will be used to fund production of the Endurance, and we do not expect that we will need any additional equity capital requirements to achieve positive cash flow,” Lordstown Motors CEO Steve Burns said in a conference call Monday morning. “We expect to achieve break even or better EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) margins in 2022, our first full year of production, and eclipse 10 percent by 2024.”

The investment by GM, which shuttered the Lordstown assembly plant in March 2019 and then sold it to Lordstown Motors, will work out to about a 5 percent equity stake when the transactions close.

The automaker invested $25 million in cash and its non-cash investments include $20 million for the land, buildings and equipment and $30 million in operating expenses.

When the plant changed hands in November, GM agreed to an open-ended mortgage agreement that let Lordstown Motors borrow up to $40 million from GM. The mortgage will terminate when the merger is final, according to GM.

“GM is excited about the progress LMC has made because we believe production of the Endurance pickup will help create jobs in the Lordstown community,” GM spokesman Dan Flores said.

Already, Lordstown Motors has more than 27,000 preorders worth more than $1.4 billion in potential revenue of the truck, mostly from commercial fleet vendors. A rolling prototype of the truck made its public debut in June.

With the expected continued growth in the electric vehicle market in the next 10 years, Lordstown Motors expects to reach 100,000 production by 2024. Production is expected in early 2021 with the first trucks targeted for delivery in the second half of that year, Burns said.

“The Endurance was constructed from the ground up with simplicity in mind,” Burns said. “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.”

DiamondPeak went public in 2019. It operates as a blank-check company — a development stage company with no specific business plan or with the business plan of mergers and acquisitions.

Its chairman and CEO, David Hamamoto, said it settled on Lordstown Motors after evaluating hundreds of companies for more than a year because of the startup’s “transformational product and business plan” that focus on the high-growth automotive sectors of electric vehicles and pickup trucks.

“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,” Hamamoto said.

rselak@tribtoday.com