Business Context and Reporting Period
Company: Workhorse Group Inc. (WKHS)
Filing Type: Form 8-K (Current Report)
Date of Report: August 15, 2025
Principal Event: Entry into a Material Definitive Agreement to merge with Motiv Power Systems, Inc. ("Motiv"), alongside related financing and asset disposition transactions.
Key Financial Metrics and Transaction Terms
Merger Consideration and Ownership Structure (Pro Forma):
- Motiv Investors: Approximately 62.5% of the combined company.
- Existing Workhorse Stockholders: Approximately 26.5%.
- 2024 Note Holder: Rights to receive approximately 11% of Workhorse Common Stock.
Financing and Capital Transactions:
- Closing Debt Financing: Up to $20 million in debt financing from entities affiliated with Motiv's largest investor.
- $10 million revolving credit facility for general corporate purposes.
- $10 million Asset-Based Lending (ABL) facility for vehicle manufacturing upon receipt of purchase orders.
- Convertible Financing: Issuance of a $5 million Subordinated Secured Convertible Note at 8% annual interest, compounded quarterly.
- 2024 Note Repayment: Workhorse will redeem approximately $30.9 million in outstanding 2024 Notes at 100% of face value plus accrued interest upon closing.
- Cash Collateral: Approximately $9.9 million deposited into a Lockbox Account to secure the 2024 Note repayment.
Asset Disposition (Sale Leaseback):
- Asset Sold: Union City, Indiana manufacturing facility and campus.
- Purchase Price: $20 million (before fees and expenses).
- Lease Terms: 20-year initial term with six 5-year renewal options. Base annual rent of $2.1 million after a six-month abatement period, subject to 3% annual increases.
Material Changes and Governance
Corporate Governance Changes:
- Board Composition: The Workhorse Board will expand to seven members at the Effective Time: five designated by Motiv and two by Workhorse.
- Director Appointment: Alan Henricks appointed to the Board (effective August 18, 2025) pursuant to the Convertible Financing terms.
- Executive Departures: CEO Richard Dauch, CFO Robert Ginnan, and General Counsel James D. Harrington have agreed to terminate employment upon the Closing of the Merger.
- Compensation Adjustments: Executives entered into amendments to reduce Change of Control payments and agreed to 280G cutbacks to avoid excise taxes.
Equity Awards:
- Unexercised stock options will be cancelled for no consideration.
- All other unvested awards will accelerate in full at the Effective Time.
Stock Structure:
- Workhorse intends to effect a reverse stock split to comply with Nasdaq listing standards.
Guidance, Risks, and Contingencies
Closing Conditions:
- Approval by Workhorse and Motiv stockholders.
- Repayment and cancellation of all outstanding Workhorse indebtedness (except the Convertible Note and Closing Debt Financing).
- Nasdaq approval of the listing of shares to be issued.
- Execution of the Closing Debt Financing and Sale Leaseback.
Termination Fees:
- Workhorse may be required to pay Motiv $1,050,000 upon termination under specified circumstances.
- Motiv may be required to pay Workhorse $1,750,000 upon termination under certain other circumstances.
Risks and Uncertainties:
- Failure to obtain regulatory or stockholder approvals.
- Delays in consummating the Equity Financing or Closing Debt Financing.
- Integration challenges and potential disruption to operations.
- Volatility in Workhorse's securities price.
Management Commentary:
The filing states that the combined company intends to remain listed on the Nasdaq Capital Market. Workhorse plans to use proceeds from the Sale Leaseback and Convertible Financing for the repayment of the 2024 Notes, transaction expenses, and general corporate purposes.
Investor Verification Checklist
- Stockholder Approval: Verify the outcome of the Workhorse stockholder vote required to approve the Merger, the reverse stock split, and the amendment to the Articles of Incorporation.
- Financing Execution: Confirm the finalization and closing of the $20 million Closing Debt Financing and the anticipated Equity Financing.
- Debt Repayment: Monitor the successful redemption of the $30.9 million 2024 Notes using the Lockbox Account funds and other proceeds.
- Nasdaq Compliance: Verify that the reverse stock split and the post-merger capitalization satisfy Nasdaq listing requirements (specifically Rule 5505).
- Executive Transition: Confirm the timeline for the departure of current executives and the appointment of new leadership from Motiv.
- Lease Obligations: Review the long-term financial impact of the 20-year lease on the Union City facility, including the $2.1 million annual rent obligation.