Workhorse (WKHS) Secures $200 Million Financing

By Amit Chowdhry ● October 13, 2020
  • Workhorse Group (Nasdaq: WKHS) announced it has entered into a note purchase agreement under which it will sell $200 million aggregate principal amount of its 4% Senior Secured Convertible Notes due 2024 to two institutional lenders

Workhorse Group (Nasdaq: WKHS) — a company that is focused on providing sustainable and cost-effective drone-integrated electric vehicles to the last-mile delivery sector — announced it has entered into a note purchase agreement under which it will sell $200 million aggregate principal amount of its 4% Senior Secured Convertible Notes due 2024 to two institutional lenders.

The proceeds of this offering before expenses are expected to be approximately $194.5 million and it will be used to increase and accelerate production volume, advance new products to market, replace previous higher cost financings, and support current working capital and other general corporate purposes.

And Workhorse also entered into an exchange agreement with the holder of its existing 4.5% convertible notes to exchange the full $70 million outstanding principal amount of those notes for shares of the company’s common stock. After the closing and release of the proceeds, the company will have over $270 million in cash available.

“With this financing in place, we can more quickly advance our production efforts heading into 2021 by increasing our supply chain component volumes, hiring more manufacturing employees, and automating certain sub-assembly processes,” said Workhorse CEO Duane Hughes. “We can also accelerate our production timeline for new, high-demand customer products, including a refrigeration truck for grocery applications as well as a purpose-built class 2 delivery van, allowing us to address  one of the fastest-growing vehicle markets in the U.S. These new vehicles within our portfolio of products, along with the expanding operations of our drone business, will help to further solidify our leadership and reach in the last-mile EV delivery segment.”

Goldman Sachs & Co. served as exclusive financial advisor to Workhorse Group. And BTIG LLC acted as the financial advisor to the lenders.

Disclosure: I have a small position of WKHS in my stock portfolio.