General Motors is in talks to sell one of the North American factories that recently closed. The potential buyer? Workhorse Group, an EV startup based in Ohio that has spent the past few years struggling to bring an all-electric van to market.
The agreement was announced prematurely by President Donald Trump in a tweet on Wednesday morning. Trump has spent the last semester of the year punishing GM for closing the assembly plant in Lordstown, Ohio in question (along with two others), saying that CEO Mary Barra made a "big mistake" and threatened that the automaker I was not going to be treated well "by his administration.
But his tone changed on Wednesday, when he said he had "GREAT NEWS FOR OHIO!". He said Barra told him GM was in the process of selling the plant from Lordstown to Workhorse, "subject to an agreement [United Automobile Workers] etc."
Trump's tweet came hours before an official statement from GM. Much weight in that "etc.", since a deal is actually far from being made.
GM finally announced on Wednesday that it is in talks to sell the massive factory, which measures more than 6 million square feet and is located on 900 acres, but the sale would be to Workhorse Group and "an affiliated entity, newly formed," according to The Detroit News The new entity would be established in an attempt to attract new investments for the manufacture of electric trucks, according to the report, but the discussions remain "roughly preliminary," said a spokesperson for the startup Jalopnik a despite that have been happening since the beginning of the year.
EXCELLENT NEWS FOR OHIO! I just spoke with Mary Barra, CEO of General Motors, who informed me that, subject to a UAW agreement, etc., GM will sell its beautiful plant from Lordstown to Workhorse, where they plan to build electric trucks. GM will also spend $ 700,000,000 in Ohio …
– Donald J. Trump (@realDonaldTrump) May 8, 2019
One of the reasons for the assault is that the Workhorse Group is currently full of problems financial, which would complicate the purchase of a massive facility such as the Lordstown plant.
Originally founded in 1998 as a manufacturer of commercial vans, Workhorse was purchased by the truck giant Navistar in 2005. Navistar sold Workhorse to AMP Electric Vehicles in 2013, a company that modified the cars with combustion engines with EV electric motors .
Since then, Workhorse has focused on the development of commercial electric vans (and assisted by electricity), and has partnered with the truck company Ryder and UPS. Workhorse is also one of the four remaining companies competing to become the manufacturer of the next-generation mail trucks of the United States Postal Service. In 2017, the company presented a design for an all-electric van called the W-15.
Workhorse is listed on the NASDAQ stock exchange, and recent financial disclosures show a grim picture of a company struggling to step on the water. The company, which has never been profitable, reported a loss of $ 36.5 million last year, as its annual sales dropped from $ 10 million in 2017 to only $ 763,000 in all of 2018. It had only $ 1.5 million in cash at the end of last year.  Workhorse had to resort to a hedge fund for help early in 2019
To stop the bleeding, Workhorse reached an agreement in early 2019 with the hedge fund Marathon Asset Management, which is known for invest in companies in difficulties. Marathon pledged up to $ 35 million in financing, with Workhorse using all of its assets, including crucial patents, as collateral. Workhorse had to use part of that money to pay off previous loans that were already due, and admitted in a recent financial statement that it would probably only cover the company's costs until the second quarter of this year. He also delayed the electric truck.
The agreement with Marathon also comes with "restrictions on [Workhorse’s] the ability to dispose of property, enter mergers, acquisitions or other business combination transactions, incur additional indebtedness, grant liens, pay dividends and make other payments restricted, "according to a recent financial file.
GM recently used the plant in Lordstown to manufacture the Chevy Cruze, and about 4,500 employees worked there before it closed in March. A representative of Workhorse told Jalopnik that the agreement could recover "hundreds" of those jobs, if indeed it is carried out.