Workhorse Group Inc., an American technology company focused on changing the way the world works by providing sustainable and cost-effective electric-mobility solutions to the transportation sector, has closed a financing in the amount of $35 million with Marathon Asset Management. The proceeds will be used for current working capital, parts acquisitions to fulfill existing and future customer purchase orders and contracts as well as to satisfy full repayment of the senior secured notes incurred in July 2018.
The facility has a three-year term secured by a first priority lien on all assets. Funds will be provided in two separate tranches, the first of which is a $10 million lump sum amount that will be used principally to satisfy repayment of the July 2018 senior secured notes. The remaining $25 million will function as a revolving credit facility from which Workhorse may draw down as necessary to meet existing and future purchase orders.
Marathon, based in New York, NY, is an opportunistic global credit event-driven manager with approximately $15 billion in assets under management. The firm pursues credit through a broad spectrum of investments in global corporate credit, distressed and special situational credit, structured credit, emerging markets and leveraged loans. A perfect fit for Workhorse's needs, Marathon is uniquely positioned to quickly create innovative financing solutions that fit within Workhorse's existing capital structure and its business objectives.
"Marathon is the right strategic partner for Workhorse's current capital needs, and we plan to leverage their experience, size and resources to further support our growth as a company," said Workhorse CEO Steve Burns. "This agreement provides meaningful, near-term funding that will go directly toward building and delivering vehicles to customers in 2019. Additionally, we have repaid, in full, our previous debt obligations from July, which will remove all covenants associated with that arrangement, including the obligation to sell our eVTOL aircraft, SureFly. Going forward, our primary goal for both current and future capital initiatives is to leverage the best available financing solutions that will provide liquidity and favorable economics."
In addition to closing the Marathon loan facility, Workhorse continues working in partnership with Duke Energy Corporation. On November 28, 2018, as the first step in the relationship, a subsidiary of Duke Energy purchased 615,000 Panasonic battery cells for $1.3 million from Workhorse. The transaction is intended as an initial step toward an arrangement between Duke Energy and Workhorse in creating an innovative battery leasing program designed to provide customers a cost competitive electric vehicle product alternative. Through this relationship, Duke Energy intends to explore further development of eFleet solutions to Workhorse customers which may include single-point management and financing of all the Behind the Meter (BTM) infrastructure necessary to support depot wide electrification, vehicle/battery leasing and distributed energy resources. Duke Energy and Workhorse believe a seamless/integrated solution will help reduce the overall costs of converting fleets to electric power enabling faster adoption of electric vehicles into commercial fleets.
Duane Hughes, Workhorse President and COO, added: "Completing these financial transactions and developing these strategic relationships are additional key steps in our long-term capital strategy. We plan to implement these measures and other near-term initiatives in the coming months to help drive continued growth in both sales and profitability."