Workhorse Group (WKHS) secured a financing deal to strengthen its balance sheet as the company looks to ramp up electric vehicle production. Workhorse stock soared again.
Workhorse said Tuesday that an unnamed institutional investor has provided $70 million via a Senior Secured Convertible Note, a type of security that may be held to maturity or converted into shares of a company’s common stock.
That represents a huge boost to its cash pile, which had been dwindling. As of March 31, Workhorse had cash and equivalents of $16.8 million, down from $23.9 million at the end of 2019.
“With this note in place, we have much greater financial flexibility to support our current and future production needs,” CEO Duane Hughes said in a statement. CFO Steve Schrader added that the financing also allows Workhorse to pursue a credit revolver, “the best financing vehicle for ramping up production.”
The struggling Ohio-based company aims to produce and deliver 300-400 electric vehicles this year. On June 23, Workhorse secured “late-stage” safety certification for its upcoming C650 and C1000 all-electric delivery vans.
Workhorse also has a 10% stake in Lordstown Motors, which is producing electric pickup trucks from an old GM plant.
Shares jumped 25% to 18.11 on the stock market today, after shooting up 46.6% Monday. For the month of June alone, Workhorse stock has soared more than 640%, and its relative strength line has bolted to its highest level ever.
EV truck startup Nikola (NKLA) lost 1.3%. Tesla (TSLA) rallied 6%, General Motors (GM) was flat, and Ford (F) added 0.4%. The four companies all plan to launch electric pickups over the next few years.
GM and Ford are also working on electric vans, while Tesla and Nikola are working on big-rig trucks. Automakers see electric trucks, big rigs and vans for the commercial market driving growth as e-commerce booms.
Find Aparna Narayanan on Twitter at @IBD_ANarayanan.
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