Shares of Workhorse Group (WKHS) – Get Report rose Monday after the electric delivery truck maker announced it will sell $200 million of four-year, 4% senior secured convertible notes to two unnamed institutional lenders.
The proceeds will 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 in a statement Monday.
Workhorse shares traded at $27.22, up 1.68%, in premarket trading. The stock has soared 781% this year through Friday as investors have rushed into electric vehicle stocks.
Workhorse also has forged an agreement with the unnamed holder of its existing 4.5% convertible notes to exchange the $70 million outstanding principal for shares of the company’s common stock. After this transaction, Workhorse will have more than $270 million in cash available.
As for the notes being purchased, they will initially be convertible into common stock by the holders at $36.14 a share, a 35% over Friday’s closing price. The interest rate may be reduced to 2.75% under certain conditions. Workhorse has the option to make interest payments in cash or stock.
The company expects that the note sale and the note exchange will occur on or about Wednesday.
“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.
“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,” Hughes added.