Shares of Workhorse Group Inc. WKHS continued their ascent after the company announced a new $70 million financing agreement.
The designer and maker of electric vehicles and truck-mounted delivery drones entered into a financing agreement with institutional investor, HT Investments (High Trail Capital), for a $70 million senior secured convertible note. The note is convertible into common stock by the investor at $19 per share, a 31% premium to the June 29 closing price of $14.51.
The new note has a 4.5% annualized coupon that will be paid quarterly in either cash or stock. Also, Workhorse may be required to repay $3.5 million in principal in monthly payments starting October 1. The note will have the same status as the company's $41 million offering issued in December with the same investor. Both senior secured convertible notes are senior to "all other debt."
Proceeds will be used to fund "operating working capital and other general corporate purposes."
"With this note in place, we have much greater financial flexibility to support our current and future production needs. Heading into the second half of the year, we'll be looking to meet our previously stated annual delivery target, which should have us in a strong position to accelerate our production ramp into 2021," said Workhorse CEO Duane Hughes.
Shares of the Loveland, Ohio-based company are up more than 30% in midday trading, continuing a hot June run. Entering the month with a share price of $2.48, the stock has benefited from a melt up that included a federal safety approval to ramp production of its electric delivery vans. At a midday price of $19.40 per share, the stock is worth nearly double its Friday closing price and nearly 8x where it entered the month.
"This financing will also allow us to continue to pursue a credit revolver, which we believe is the best financing vehicle for ramping up production. We expect these proceeds to provide corporate operating funds for the foreseeable future," said Workhorse CFO Steve Schrader.
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