RMO Romeo Power Inc

As previously disclosed, on October 25, 2021, BorgWarner Inc. (with its affiliates, including BorgWarner Ithaca LLC, “BorgWarner”) delivered a written notice to Romeo Power, Inc. (the “Company” or “Romeo”) that BorgWarner is electing to exercise a right under that certain Joint Venture Operating Agreement, dated May 6, 2019, by and among BorgWarner Ithaca LLC, Romeo Systems, Inc. and BorgWarner Romeo Power LLC (the “Operating Agreement”) to put its ownership stake in BorgWarner Romeo Power LLC (the “Joint Venture”) to Romeo. The Operating Agreement, together with the Intellectual Property License Agreement, dated May 6, 2019 (the “IP License Agreement”), by and among BorgWarner, Romeo Systems, Inc., Romeo Systems Technology, LLC and BorgWarner Romeo Power, LLC, govern the operations of the Joint Venture, which is owned 40% by the Company and 60% by BorgWarner Ithaca LLC. The Operating Agreement provides BorgWarner a right to cause Romeo to purchase BorgWarner’s 60% ownership stake in the Joint Venture.

On January 4, 2022, the Company and BorgWarner received the report of an independent appraiser, calculating the value of the Joint Venture to be $50.2 million, and BorgWarner’s 60% ownership stake in the Joint Venture, with appropriate discounts pursuant to the Operating Agreement, to be $28.6 million. The parties must now work to document and consummate the purchase and sale of BorgWarner’s ownership stake in the Joint Venture to the Company, including terms of payment, within thirty (30) days of the valuation date. The Company currently anticipates that it will use existing liquidity to fund the transaction.

For additional information about the Joint Venture and the terms and conditions of the Operating Agreement and the IP License Agreement, see “Part I. Item 1. Business – Joint Venture with BorgWarner” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the Securities and Exchange Commission (the “SEC”) on April 15, 2021. A copy of the IP License Agreement was filed as Exhibit 10.22 to the Registration Statement on Form S-4 filed on October 15, 2020, and a copy of the Operating Agreement was filed as Exhibit 10.23 to the Registration Statement on Form S-4 filed on October 15, 2020.

Forward Looking Statements

Certain statements in this Current Report on Form 8-K may constitute “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding Romeo’s purchase of BorgWarner’s ownership stake in the Joint Venture, the source of funds for the transaction, and the timing and impact of such purchase on Romeo’s business operations. Such statements are based on current assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially, including our ability to obtain a favorable outcome in our ongoing dispute with BorgWarner, as well as other risks set forth in our most recent Annual Report on Form 10-K for the year ended December 31, 2020 and the other documents that we file with the SEC. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We disclaim any obligation to update these forward-looking statements because of new information, future events or circumstances or other factors.