By David Shepardson and Tiyashi Datta

(Reuters) -Lordstown Motors warned on Monday it is perhaps pressured to file for chapter resulting from uncertainty over a $170 million funding take care of its main shareholder Foxconn, sending shares of the Ohio-based electrical truck maker down 23%.

Foxconn struck a deal in November to take a near-20% stake within the money-losing U.S. agency for as much as $170 million. It has since invested $52.7 million and is balking at buying further shares, citing a breach of their settlement, Lordstown mentioned.

Foxconn mentioned in a press release that it could fulfill its obligations beneath the settlement and remained open to persevering with talks and dealing collectively to succeed in a mutually acceptable end result.

The dispute is a contemporary setback to the U.S. firm, which has a dwindling money stability and manufacturing challenges. The corporate mentioned in February that it had made solely 37 vehicles on the market and recalled 19 automobiles delivered to prospects or getting used internally.

“There may be substantial doubt concerning our capacity to proceed as a going concern,” Lordstown mentioned in a submitting, referring to its dispute with Foxconn over the funding deal.

With out a decision with Foxconn, different funding or new companions, it could possibly be pressured to file for chapter or stop operations, it mentioned, including the corporate was in talks with the Taiwanese agency to hunt a decision.

It rejected Foxconn’s allegation of a breach of its settlement, saying the declare was primarily based on a delisting discover Nasdaq had despatched the Ohio-based automaker.

Lordstown mentioned final month the discover had no instant impression on its inventory itemizing and it had till Oct. 16 to regain compliance with Nasdaq’s guidelines.

“Foxconn’s actions are fully unwarranted. Their course of conduct has resulted in materials — and what’s turning into irreparable — hurt to the corporate,” Lordstown mentioned in a press release.

“Within the absence of a well timed decision, we are going to take all actions mandatory to guard our enterprise pursuits and implement all of our rights and cures.”

Shares in Foxconn, formally known as Hon Hai Precision Business Co Ltd, traded up 0.5% on Tuesday in Taipei, according to the broader market.

Lordstown shares, which at one level tumbled greater than 50% on Monday, closed down 23%, or 12 cents, at 40 cents, in heavy buying and selling. They had been down an extra 5% in after hours buying and selling.

The funding deal follows a separate $230 million sale of Lordstown’s Ohio plant to Foxconn final 12 months, because the Taiwanese contract manufacturing agency diversifies into electrical automobile manufacturing for a contemporary income supply.

Lordstown started manufacturing of its Endurance electrical pickup vehicles within the manufacturing unit final September in collaboration with Foxconn.

The previous GM plant is likely one of the highest quantity single-line automobile meeting crops on this planet. It might construct about 320,000 automobiles a 12 months, excluding additional time.