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Stock deal clears Workhorse Group’s debt

Once swimming in borrowing, company pulls a 180-degree turn under new management

Electric van maker Workhorse Group has cleared its balance sheet of debt as it prepares for a relaunch with new products. (Photo: Alan Adler/FreightWaves)

Editor’s note: Updates with closing stock price.

Workhorse Group completed a 180-degree turn from debtor to debt-free by paying a premium of common stock to a hedge fund lending source favored by prior management.

The Loveland, Ohio-based maker of drone-integrated electric vehicles for last-mile delivery said Wednesday it has agreed to swap senior secured convertible notes held by High Trail Capital that cost 4% interest for about $29.7 million in Workhorse stock. 

According to a Securities and Exchange Commission filing, the price includes a 7 percentage point premium. It wipes the last remaining debt from the company’s balance sheet. High Trail exchanged $27.5 million in notes for 5,793,888 shares, roughly $4.75 a share. 


Workhorse (NASDAQ: WKHS) shares closed Wednesday at $4.44, down 11.90% in a sectorwide sell-off of electric vehicle stocks.

“Over the past year, we’ve taken significant steps to stabilize and strengthen our financial position in order to transition Workhorse from an advanced technology start-up to an efficient manufacturing company,” Bob Ginnan, Workhorse chief financial officer, said in a press release. 

“With this transaction we are moving forward with a debt-free balance sheet, increased financial flexibility and a stronger financial foundation to continue executing on our manufacturing and product roadmaps.”

No longer awash in debt

It is a far cry from where Workhorse stood as recently as 18 months ago when it was mired in a cycle of living on borrowed money and exchanging debt instruments to get better deals based on a stock price driven by retail investors expecting Workhorse to win a U.S. Postal Service contract for next-generation delivery vehicles.


When the Postal Service contract was awarded to Oshkosh Corp. in February 2021, speculators in Workhorse stock ran for the exits, driving the share price 50% lower in two trading sessions. Production delays of its C-Series electric van, the COVID pandemic and quality issues led to a management shake-up last August.

The stock price continued to fall, dropping below $2.50 before rebounding. 

Upon taking over last August, new CEO Richard Dauch conducted a monthslong review of the business, dropping a challenge in the U.S. Court of Claims seeking to reverse the mail truck award. He also suspended most production and recalled 41 vans sold to customers.

To bridge the gap until it is ready with new Class 3-6 trucks, Workhorse will finish and sell a version of GreenPower Motor Co.’s medium-duty Class 4 vehicle.

Workhorse is watching from the sidelines as some members of Congress challenge Oshkosh and the Postal Service’s decision to make a majority of new gasoline-powered mail trucks when the Biden administration has pledged to make the federal fleet run on electricity.

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Click for more FreightWaves articles by Alan Adler.

Alan Adler

Alan Adler is an award-winning journalist who worked for The Associated Press and the Detroit Free Press. He also spent two decades in domestic and international media relations and executive communications with General Motors.