Business Context and Reporting Period
Company: Workhorse Group Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: April 1, 2019
Event: Entry into a Material Definitive Agreement (Second Amendment to Credit Agreement).
Key Financial Metrics
This filing does not report revenue, profit, cash flow, or general liquidity figures. It specifically addresses covenant thresholds within the amended credit agreement:
- Minimum Liquidity Requirement: $4 million (maintenance period delayed).
- Maximum Total Leverage Ratio: 4.50:1.00 (Total Debt to EBITDA).
- Maximum Debt Service Coverage Ratio: 1.25:1.00 (EBITDA to interest expense and operating lease payments).
Material Changes Versus Prior Period
The Company amended its Credit Agreement dated December 31, 2018, to delay the application of specific financial covenants:
- Liquidity Covenant: The requirement to maintain at least $4 million in liquidity was delayed from March 31, 2019, to April 30, 2019.
- Leverage Ratio: The 4.50:1.00 maximum total leverage ratio requirement was delayed from the quarter ending September 30, 2019, to the quarter ending December 31, 2019.
- Debt Service Coverage: The 1.25:1.00 maximum debt service coverage ratio requirement was delayed from the quarter ending September 30, 2019, to the quarter ending December 31, 2019.
Guidance, Outlook, and Risks
Management Commentary: The filing indicates a strategic adjustment to debt terms to provide additional time before strict financial covenants take effect. No forward-looking revenue or earnings guidance is provided in this document.
Risks and Contingencies: The primary risk highlighted is the Company's ability to meet the amended financial covenants by the new deadlines (April 30, 2019, and December 31, 2019). Failure to meet these ratios could result in a default under the Credit Agreement.
Important Facts for Investor Verification
- Verify the Company's current cash balance to ensure compliance with the $4 million minimum liquidity requirement effective April 30, 2019.
- Review the Company's most recent EBITDA and total debt figures to assess the trajectory toward the 4.50:1.00 leverage ratio deadline of December 31, 2019.
- Confirm the identity of the lenders (affiliates of Marathon Asset Management, LP) and the agent (Wilmington Trust, National Association).
- Examine the full text of the Second Amendment to Credit Agreement (Exhibit 10.1) for any additional conditions or definitions not summarized in the 8-K.