Workhorse Secures $200 Million in Financing

CINCINNATI, Ohio – Workhorse Group Inc., an electric-vehicle manufacturer that owns a 10% stake in Lordstown Motors Corp., announced that it has raised $200 million so it could “increase and accelerate production volume.”

According to a release issued Monday, the company said it had entered into a note-purchase agreement with two institutional lenders. The proceeds before expenses are expected to be about $194.5 million.  

Once the deal closes, Workhorse expects to have about $270 million in cash available.

The financing would 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, the company said. 

“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,” Workhorse CEO Duane Hughes said in a statement. “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.”

Workhorse reportedly is a frontrunner for landing a more than $6 billion contract from the United States Postal Service to build its next generation delivery vehicles. 

That would provide a big boost to Lordstown Motors, the electric-vehicle startup established by former Workhorse CEO Steve Burns. Lordstown Motors purchased the former General Motors Lordstown Complex in November 2019 and plans to start full production of The Endurance, an all-electric pickup, this summer.

Burns has said that Lordstown Motors would like to manufacture the USPS trucks for Workhorse. 

The USPS has said it would make a decision on the contract by the end of the year. However, some analysts suspect that the award could come as early as today. The financing for the Workhorse deal is expected to close tomorrow.

A company note issued by Roth Capital Partners on Oct. 9 expressed high optimism that Workhorse would be the sole winner of the contract, since it is the single bidder proposing an all-electric delivery vehicle to replace the USPS fleet.

“We expect Workhorse to be the recipient as an EV is the best fit for the USPS application,” the research note said.

Moreover, should Workhorse win the bid, it could inject $800 million of new business to Lordstown Motors’ operations, the Roth company note suggested.

“Lordstown Motors is the probable manufacturing site for a Workhorse NGDV [Next Generation Delivery Vehicle],” the report stated. Although it is unclear as to how outsourcing would work, the report said, any manufacturing contract with Lordstown Motors could “reasonably be expected to represent roughly $800 million in potential revenue to LMC.”

Published by The Business Journal, Youngstown, Ohio.