Ohio-based electric vehicle manufacturer Workhorse Group Inc. (NASDAQ:WKHS) has entered into a securities purchase agreement with an institutional investor, securing an additional $2.6 million in funding. The deal, formalized on Friday, involves the issuance of a senior secured convertible note and a warrant to purchase common stock shares.
The convertible note, with an original principal amount of $2.6 million, is part of a larger financing arrangement initially disclosed on March 15, 2024. It comes with a 12.5% original issue discount, resulting in $2.275 million of proceeds to Workhorse before fees and expenses.
The note carries a 9.0% annual interest rate, payable quarterly, and will mature one year from the issue date, with potential extensions under certain conditions. The funds are secured by the company's assets and guaranteed by its subsidiaries.
Investors holding the note have the option to convert the amount due into Workhorse common stock at a conversion price that is subject to adjustment under specific terms. The conversion price is the lower of a pre-set reference price or a price based on a percentage of the stock's average trading price preceding the conversion notice.
However, conversions are capped to prevent the investor from exceeding a 4.99% or 9.99% ownership threshold in Workhorse's outstanding common stock.
Moreover, Workhorse has issued a warrant that allows the investor to purchase up to 2,891,901 shares of common stock. The warrant is exercisable immediately and valid for ten years from the issuance date, with an exercise price of $1.1101 per share.
This financing move is part of Workhorse's ongoing efforts to raise capital through registered public offerings to the investor, which could reach up to $139 million in aggregate principal amount of notes and corresponding warrants. As of August 22, 2024, the company had $6.85 million outstanding under the notes, and no shares had been issued under the warrants.
The agreement is part of Workhorse's broader strategy to strengthen its financial position and support its operations in the competitive electric vehicle industry. The company's shares are traded on The Nasdaq Capital Market under the ticker symbol WKHS.
This news is based on a press release statement and provides investors with the latest financial developments regarding Workhorse Group Inc.
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