Workhorse Group Secures $35 Million In Financing

JAN 5 2019 BY MARK KANE 22

Workhorse received a cash injection for further business development

The Workhorse Group, which produces electric delivery vehicles, develops W-15 range-extended pickup truck and SureFly eVTOL (electric vertical takeoff & landing) octocopter, has secured $35 million in financing from Marathon Asset Management.

According to the company, “immediate access to capital enables funding for existing and future purchase orders, satisfies existing debt obligations, and serves as another key step in Workhorse’s long-term capital strategy.”

Recently we didn’t hear much about the W-15, which could be totally overshadowed by Rivian, but the SureFly eVTOL will be present at the 2019 Detroit Auto Show.

More about the Workhorse financing in the press release:

“The proceeds will be used for current working capital, parts acquisitions to fulfill existing and future customer purchase orders and contracts as well as to satisfy full repayment of the senior secured notes incurred in July 2018.

The facility has a three-year term secured by a first priority lien on all assets. Funds will be provided in two separate tranches, the first of which is a $10 million lump sum amount that will be used principally to satisfy repayment of the July 2018 senior secured notes. The remaining $25 million will function as a revolving credit facility from which Workhorse may draw down as necessary to meet existing and future purchase orders.

Marathon, based in New York, NY, is an opportunistic global credit event-driven manager with approximately $15 billion in assets under management. The firm pursues credit through a broad spectrum of investments in global corporate credit, distressed and special situational credit, structured credit, emerging markets and leveraged loans. A perfect fit for Workhorse’s needs, Marathon is uniquely positioned to quickly create innovative financing solutions that fit within Workhorse’s existing capital structure and its business objectives.”

“In addition to closing the Marathon loan facility, Workhorse continues working in partnership with Duke Energy Corporation (NYSE: DUK). On November 28, 2018, as the first step in the relationship, a subsidiary of Duke Energy purchased 615,000 Panasonic battery cells for $1.3 million from Workhorse. The transaction is intended as an initial step toward an arrangement between Duke Energy and Workhorse in creating an innovative battery leasing program designed to provide customers a cost competitive electric vehicle product alternative.  Through this relationship, Duke Energy intends to explore further development of eFleet solutions to Workhorse customers which may include single-point management and financing of all the Behind the Meter (BTM) infrastructure necessary to support depot wide electrification, vehicle/battery leasing and distributed energy resources. Duke Energy and Workhorse believe a seamless/integrated solution will help reduce the overall costs of converting fleets to electric power enabling faster adoption of electric vehicles into commercial fleets.”

Workhorse CEO Steve Burns said:

“Marathon is the right strategic partner for Workhorse’s current capital needs, and we plan to leverage their experience, size and resources to further support our growth as a company. This agreement provides meaningful, near-term funding that will go directly toward building and delivering vehicles to customers in 2019. Additionally, we have repaid, in full, our previous debt obligations from July, which will remove all covenants associated with that arrangement, including the obligation to sell our eVTOL aircraft, SureFly. Going forward, our primary goal for both current and future capital initiatives is to leverage the best available financing solutions that will provide liquidity and favorable economics.”

Duane Hughes, Workhorse President and COO, added:

“Completing these financial transactions and developing these strategic relationships are additional key steps in our long-term capital strategy. We plan to implement these measures and other near-term initiatives in the coming months to help drive continued growth in both sales and profitability.”

Categories: Trucks

Tags: ,

Leave a Reply

22 Comments on "Workhorse Group Secures $35 Million In Financing"

newest oldest most voted

I wish these guys and Rivian both well. Hopefully between the two of them (and later Tesla) they will electrify the pickup truck market. Now we just need someone to step up and target the CRV/RAV4 sized and priced CUV market and the top 10 selling US vehicle market would be covered.

I hope you remember that the RAV4 used to have a BEV variant powered by Tesla. Toyota could do this tomorrow if they wanted to do so. They do not. Anticipate more PHEV SUVs/CUVs; it is the cautious move versus doing nothing. These are car companies, not technology companies. Unions are involved. Massive supplier contracts are involved. Dealers are deciding who buys what.

I definitely remember the RAV4 EV and have seen a couple here around Austin. Given the relatively poor aerodynamics of that generation it does seem like with some better aerodynamics (but not to the point of compromising the U in CUV) and an 80 kWh battery (with a 100 kWh long range option) would be an excellent product. Model Y will no doubt offer this but in the $40K-$60K price range which is BMW X3 territory Vs the mid $20K mid $30K range that most main stream CUVs go for. So, the wait is still on…

Yes the wait is on, likely for a long time. Waiting for better batteries like everything else. Your CUV with an 80-100kwh battery for $25-30,000 is ages away and impossible with today’s technology. I eagerly await too. The day when your dream is possible, everything everywhere will change for the better.

Model Y ???

Probably too big and too expensive for this segment.

it will be too expensive for sure. ICE CUV prices are around $28000. Model Y will be around $50K.

Entry Model Y should be around $40,000.

The Model Y will be more top of the line Lexus, Audi or Mercedes than Toyota RAV4. It will likely be about the size of RAV4, but no where near as accessible to the average buyer.

Volvo XC40.

Personally, I prefer Bollinger first, but the more the merrier. And any possible price war/discount because of competition is fine by me too.

CRV/RAV4 are both Compact sized…The Model Y will supposedly be Midsize…
It’ll probably be at least five years at this point before you can even buy a base Tesla Model Y…

Five years? That’s a ridiculous claim, even given Tesla’s history of missed targets.

Isn’t VW Crozz looking to break into that segment with similar price of the ICE RAV4

Workhorse should do what I though Rivian was going to do. Since they obviously have limited funds, they should develop electric skateboard chassis that can bolt right up existing Fords, Chevys and Dodges. Then the OEMs could buy them and have an electric pickup offering with no R&D , or startup costs to them, or they could just sell them in the aftermarket so that anyone could make their own capable conversion. This way they don’t have to get money and funding to design and built all the bodywork and interior as well.

That and scrap the silly VTOL aircraft thing. Talk about money pit! Like they say- “If you want to make a small fortune in aviation, start with a big one.”

“…W-15, which could be totally overshadowed by Rivian“

Rivian and Workhorse are going after different markets. Rivian is going after wealthy people that want to portray a green and outdoor adventure persona and lifestyle.

Workhorse is going after people that need practical actual work trucks and the fleet market. The W15 is supposed to be ~$50k vs the Rivian, while starting at $60k, will probably average well above and is more luxury oriented.

^this. Workhorse was going to be much closer to a standard pickup truck, whose function included two way watts from the battery. It was fundamentally a PHEV, where Rivian needs to reach deep into the KWh necessary that will take an “experience” adventure vehicle as far as owners are apt to want to wander. The W-15 is sad to see not arrive, because it would have been so practical.

This bodes well for the next generation of post office delivery vehicles, I heard Workhorse was bidding on supplying the EV drive train for that. The unit count could be in the six figures if I understand. Workhorse has already delivered hundreds of UPS delivery trucks.

Maybe it’s just me but 35 million sure doesn’t sound like much for what these people seem to be trying to accomplish.

Especially if the 10 with 25 revolving, just doesn’t sound like enough.

I was thinking the same thing. It seems like a lot until you consider that Tesla had multiple quarters where they went through a billion dollars or more before they achieved profitability. So if that’s the scale that automobile manufacturers need to ramp up production, 35 million will only get them a handful of prototypes or similar. My guess is they’ll use that money to provide proof of concept vehicles in hopes of getting further grants, loans, or investments in the hundreds of millions range.

I’ll admit I haven’t followed Workhorse much, nor did I Tesla from the beginning, but have followed Rivian for long time. Rivian bought the Normal IL facility for 16 million and they figure they will have 200 million in it by time it’s in production shipping trucks and SUVs but they put together just shy of 1/2 billion in financing from various sources. I think Rivian really has their ducks in proper order to be successful getting to real production and shipping finished units out the door.

Tesla never burned through a billion in one quarter — though some were somewhat close…

However, that’s a completely different scale. Workhorse isn’t planning on building 500,000 vehicles a year any time soon. Tesla’s investments for Model 3 production were a fraction of those for Model 3 production, since the volumes are a fraction.