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Investing.com -- Workhorse Group Inc (NASDAQ:WKHS) stock plunged 13.6% following the company’s disclosure that it is in discussions regarding a potential merger that could significantly dilute existing shareholders.
The American zero-emission commercial vehicle manufacturer revealed it is in talks with a privately held U.S.-based electric commercial vehicle manufacturer about a transaction that would merge the private company into a Workhorse subsidiary. While specific share numbers haven’t been determined, Workhorse indicated that current investors of the private manufacturer would hold "a substantial majority" of Workhorse’s outstanding common stock after the deal closes.
The potential transaction also includes refinancing of Workhorse’s outstanding senior secured convertible notes and cancellation of related warrants. This refinancing would be provided by entities affiliated with the majority equity holder of the private manufacturer and would include an approximately $20 million sale-leaseback of Workhorse’s Union City, Indiana manufacturing facility.
As part of the arrangement, Workhorse would repay its outstanding obligations under the notes in full without paying redemption premiums or penalties. The company would issue three million new common shares to the institutional investor holding the notes, with some shares subject to trading restrictions.
Workhorse disclosed that as of July 10, 2025, its outstanding obligations under the notes were approximately $33 million. The company has entered into a 14-day exclusivity agreement with the manufacturer on July 14, preventing Workhorse from negotiating with other parties during this period, subject to a "fiduciary out" provision.
The company emphasized that no definitive agreements have been reached, and the potential transaction would require approval from Workhorse stockholders and Nasdaq, among other conditions.
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