DPSGY Deutsche Post AG (PK)

By Andrew Scurria 

Electric truck and drone developer Workhorse Group Inc. reached a deal with lender Marathon Asset Management LP to relax financial covenants on a $35 million financing package as the company tries to meet demand for its vehicles.

Workhorse took out the loan from Marathon in January, saying it would provide "meaningful, near-term funding" toward building and delivering vehicles to United Parcel Service Inc., Deutsche Post AG's DHL and other customers this year. The lender supplied a $10 million lump sum, plus a $25 million revolving line of credit to meet purchase orders.

Marathon has now agreed to push back to April 30 from March 31 a requirement for Workhorse to maintain $4 million in liquidity, according to a Tuesday securities filing. As of Dec. 31, Workhorse had $1.5 million in cash, cash equivalents and short-term investments.

Deadlines for the company to achieve certain leverage ratios and debt service coverage ratios were also delayed to Dec. 31 from Sept. 30, according to the filing.

Workhorse, which develops and sells electric-powered delivery trucks and vans for package-delivery companies and utilities, reported a backlog of 1,100 orders for its NGEN-1000 electric vans last month. The company started building prototypes in October.

Trucking delivery companies such as FedEx Corp., DHL and UPS are eager to add electric delivery vans to their fleet as regulators push to rein in pollution from commercial vehicles. All three have ordered Workhorse electric trucks in recent years.

But capital constraints have prevented Workhorse from delivering on the backlog, shrinking sales to $21,000 in the fourth quarter last year, down from $5.2 million in the same period a year earlier. Net loss was $17.7 million, up from $11.7 million a year before, after the company absorbed additional warranty costs.

Chief Executive Duane Hughes acknowledged that last year was "a challenging time for our business" but said the Marathon loan would allow the company to reduce its dependence on equity financing and focus on "the profitable manufacturing and delivery of the electric vehicles we currently have in our significant backlog."

Write to Andrew Scurria at Andrew.Scurria@wsj.com

WSJ Pro Bankruptcy also covers distressed companies. Inclusion of a company in this category is not intended to suggest that it will file for bankruptcy protection, default on its debt or suffer any other financial failure.

(END) Dow Jones Newswires

April 03, 2019 17:50 ET (21:50 GMT)

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