First, it was President Trump who tweeted about Workhorse Group Inc. (NASDAQ:WKHS) possibly buying the closed General Motors Lordstown Assembly complex in Ohio. Now, Vice President Mike Pence is declaring the funds to buy the plant have been secured.
Not so fast.
GM is exclusively negotiating a sale of the plant to a group led by Workhorse founder Steve Burns. But Burns, who stepped down as CEO of Workhorse in February, does not yet have the estimated $300 million needed to purchase the plant, according to GM spokesman Jim Cain.
“GM and the new company are working through the due diligence, which is a prelude to launching the financing drive,” Cain told FreightWaves. “There’s a lot going on in the background.”
Burns did not return a call seeking comment.
Workhorse, the Cincinnati-based manufacturer of electric step vans and the Horsefly delivery drone, is focused on a fourth-quarter launch of its NGEN-1000 lightweight van at a former Navistar (NYSE:NAV) International plant it owns in Union City, Indiana.
Workhorse has hundreds of orders for the vans from UPS (NYSE:UPS) and DHL (OTC:DPSGY) among others. But until it raised $25 million from current investors in June to satisfy liquidity requirements of a $35 million hedge fund loan, it lacked sufficient cash to buy parts.
Pence, in remarks at the groundbreaking of a Magna International (NYSE:MGA) auto seating plant in Lancaster, Ohio, said he learned Workhorse had “secured the financing to move forward to keeping jobs in (Lordstown).”
His reference apparently was to the capital infusion that gave Workhorse a lifeline.
“Workhorse is not buying the Lordstown plant,” Cain said, reiterating that GM is negotiating with the new company led by Burns.
But the high-profile attention on Lordstown’s future ahead of the 2020 presidential election is doing wonders for Workhorse.
Company shares closed Wednesday, July 31, at $5.19, up 601 percent from $0.74 per share on May 8, the day GM confirmed it was in discussions with Burns.
Workhorse would be an equity investor in the former GM facility, Cain said, It also would license electric pickup truck technology to the Burns-led company, which plans a commercial fleet version of the truck. Workhorse has delayed its W-15 version for financial reasons.
The 53-year-old Lordstown plant manufactured the Chevrolet Cruze compact sedan until March of this year when 1,650 hourly and salaried workers lost their jobs. GM announced in November 2018 that Lordstown was among five plants it planned to close in a cost-cutting restructuing.
The UAW is pressing GM to assign a new product to Lordstown as part of national contract talks that opened with the automaker in July. The union has said little publicly about the Burns’ offer.
Even if it was overwhelmingly successful, a commercial electric pickup would require just a fraction of Lordstown’s 6.2 million square feet complex that includes vehicle assembly, paint shop and a separate metal fabricating plant.
There is speculation that President Trump could steer a $6.3 billion contract to build the next-generation U.S. Postal Service delivery vehicle to Workhorse, a finalist for the contract with partner VT Hackney, a commercial truck and van body maker based in Washington, N.C.
Lordstown, located near Youngstown in the industrial Mahoning Valley, was a key to Trump winning Ohio in the 2016 presidential election. He has privately and publicly pressed GM CEO Mary Barra to find a product for the plant that would retain the jobs.