Workhorse, the EV Company Looking to Move Into GM's Shuttered Ohio Plant Gets a $25 Million Cash Infusion
Workhorse Group, the electric truckmaker that General Motors confirmed it was in negotiations with the company's founder to purchase GM's shuttered assembly plant in Lordstown, Ohio has received a much-needed cash infusion.
The electric vehicle startup said Monday that it had raised $25 million from investors.
Workhorse, which is based in Cincinnati, said the money would come from an unnamed group of institutional investors and was not intended to go toward the purchase of the GM plant.
In a regulatory filing earlier this year, Workhorse said it needed to raise $22 million to continue to make delivery trucks for UPS, DHL and its other customers. Workhorse is working with the logistics companies developing an electric cargo vans for commercial use in urban areas.
Among its offerings, Workhorse is building electric carbon-fiber delivery vans weighing just 5,500 pounds but can carry a one-ton load with a range of up to 100 miles from a 60-kilowatt-hour battery pack. The company is currently testing the electric vans in San Francisco.
"This funding provides Workhorse with sufficient capital to fully deliver on our existing backlog," Duane Hughes, Workhorse's chief executive, said in a statement.
GM said it was having discussions with Workhorse's founder and former chief executive about buying the the automaker's idle plant in Lordstown, Ohio. The plant built the Chevy Cruze sedan, which was discontinued as part of a restructuring move announced in November of last year.
GM said it was moving away from sedans that are becoming less popular with consumers and instead is building more SUVs, crossovers and electric models.
Although the $25 million in new funding is significant its still not enough for Workhorse. Steve Burns, Workhorse's former chief executive, has said he needs to raise about $300 million to acquire and restart the Lordstown plant.
President Trump, who openly criticized GM for closing the Lordstown facility, disclosed the potential sale to Workhorse hours before GM officially announced it in early May, putting the little known company in the national spotlight.
According to the New York Times, Workhorse intends to take a minority stake in the unnamed company that Steve Burns, the company's former chief executive, said he formed to buy the factory.
In return for providing Workhorse with cash, investors are getting preferred stock and warrants to purchase shares. The preferred stock comes with an annual dividend that is paid out in shares of Workhorse stock.
The warrants have an exercise price of $1.62 a share and can be immediately exercised by the investors, according to a regulatory filing.
Shares of Workhorse closed at $2.85 on Monday, up 25 percent.
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