Workhorse secures $25 million in financing
LORDSTOWN — A technology company that would have a stake in an electric pickup truck startup interested in buying the idled General Motors assembly plant in Lordstown has secured $25 million in private investment.
But none of it appears will be used to acquire the behemoth building that stopped production March 6.
Cincinnati-based Workhorse Group Inc. announced it has agreements with a group of institutional investors that, according to company CEO Duane Hughes, provides “sufficient capital to fully deliver on our existing backlog.”
A release from the company mentions nothing about the GM facility, and the New York Times has reported the company has said the money is not intended to go toward purchase of the plant.
“We now have all necessary pieces in place to bridge Workhorse into full-scale N-GEN production and are looking forward to commencing the manufacturing process, in earnest, during the fourth quarter of this year,” Hughes said.
Workhorse, which designs and manufacturers electric fleet-style delivery trucks, would hold a minority stake in the yet-to-be-named startup by Workhorse founder and ex-CEO Steve Burns, who hopes to purchase the GM facility to produce what he’s said before would be meat-and-potatoes-style electric fleet pickup trucks.
GM announced in May it was in talks to unload the plant to Burns’ fledgling company. Since, questions about Workhorse’s financial stability have risen and officials have doubled-down on their calls for GM to assign a new vehicle to the plant, which for about 10 years had produced one of the company’s better selling vehicles, the Chevrolet Cruze.
Some local officials met with Burns in Columbus in May, and said although the startup has potential, they left with more questions than answers.
Then earlier this month, U.S. Sens. Rob Portman, R-Ohio, and Sherrod Brown, D-Ohio, and U.S. Rep. Timothy J. Ryan, D-Howland, met with GM CEO Mary Barra, who, according to Brown, “doesn’t want to create false hopes” about the automaker reopening the plant.
Under the terms of the financial agreements, investors acquired shares of Series B preferred stock and warrants to purchase common stock. The Series B preferred stock is not convertible, but the holders are entitled to annual dividends payable in shares of common stock.
The closing with respect to approximately $15 million happened May 31. The balance of about $10 million closed on June 10. The proceeds will be used for general working capital and research and development, allowing the company to focus on finalizing the R&D associated with the N-GEN model followed by production of the existing contracted backlog, according to the company.
Earlier this year, Workhorse, a publicly traded company, warned in a quarterly regulatory filing that it didn’t have enough money to pay for its operations through the first half of this year and needed additional financing to stay afloat.