DEFA14A: Workhorse Urges Shareholder Vote for Motiv Merger

Workhorse Group Inc. is urging shareholders to approve its merger with Motiv Power Systems, Inc., stating it is the only viable path forward to preserve shareholder value.

Summary

• Workhorse Group Inc. is soliciting shareholder votes for its merger with Motiv Power Systems, Inc.
• The company's Board believes this merger is the only viable path forward for the company and its investors.
• Failure to approve the merger will likely lead to Workhorse facing liquidity issues and potential restructuring, where equity holders may recover little to no value.
• The merger offers the opportunity to participate in the potential upside of a leader in the medium-duty EV commercial vehicle market.
• Approval is expected to create a broader product portfolio, strengthen the financial position, and create long-term shareholder value.
• Shareholders are urged to vote FOR the proposals on the ballot for the 2025 Annual Meeting of Stockholders.

Sentiment

Score: 3

Explanation: The filing conveys a sense of urgency and potential distress if the merger does not proceed, highlighting severe negative consequences for shareholders. While the merger itself is presented positively, the underlying message is a warning against a very negative alternative, leading to a low sentiment score despite the positive framing of the merger outcome.

Positives

• Provides the opportunity to participate in the potential upside of a leader in the medium-duty EV commercial vehicle market.
• Expected to create a broader product portfolio for the combined entity.
• Anticipated to strengthen the company's financial position.
• Aims to create long-term shareholder value.

Negatives

• If the merger is not approved, Workhorse will likely continue to face liquidity issues.
• Failure to approve the merger could lead to a restructuring, where equity would likely recover very little or no value.

Risks

• Inability of parties to successfully integrate businesses and technologies, potentially leading to less effective and efficient combined operations.
• Risk that expected benefits and synergies of the proposed transaction may not be fully achieved in a timely manner, or at all.
• Workhorse's ability to obtain shareholder approval for the transaction and the timing of closing, including conditions not being satisfied or failure to close for other reasons.
• Risk that required regulatory approvals, consents, or authorizations are not obtained or are subject to unanticipated conditions.
• Occurrence of any event, change, or circumstance that could terminate the proposed transaction.
• Unanticipated difficulties, liabilities, or expenditures related to the transaction.
• Effect of the announcement, pendency, or completion of the proposed transaction on business relationships and operations.
• Effect of the announcement or pendency of the proposed transaction on Workhorse's common stock prices and uncertainty regarding the long-term value of the combined company's common stock.
• Risks that the proposed transaction disrupts current plans and operations and potential difficulties in hiring or retaining employees.
• Ability to develop and manufacture the product portfolio, including W4 CC, W750, and W56 and other programs.
• Ability to attract and retain customers for existing and new products.
• Ongoing and anticipated changes in the U.S. political environment, including those from the new Presidential Administration, control of Congress, and changes to regulatory agencies.
• Implementation of changes to the existing tariff regime by the new Presidential Administration and responsive measures by foreign governments.
• Risks associated with obtaining orders and executing upon such orders.
• Unavailability, reduction, elimination, or adverse application of government subsidies and incentives, or challenges to regulations like California Air Resource Board's Advanced Clean Fleet.
• Changes in attitude toward environmental, social, and governance matters among regulators, investors, and business partners.
• Supply chain disruptions, including constraints on steel, semiconductors, and other material inputs, and resulting cost increases.
• Ability to capitalize on opportunities to deliver products to meet customer requirements.
• Limited operations and need to expand and enhance production processes to fulfill product orders.
• General inability to raise additional capital to fund operations and business plan.
• Ability to receive sufficient proceeds from current and future financing arrangements to meet immediate liquidity needs, and potential costs, dilution, and restrictions from such financing.
• Ability to maintain compliance with Nasdaq listing requirements and impact of steps taken (e.g., reverse splits) on operations, stock price, and future access to funds.
• Ability to protect intellectual property.
• Market acceptance of products.
• Ability to obtain sufficient liquidity from operations and financing activities to continue as a going concern, and ability to control expenses.
• Effectiveness of cost control measures and their impact on operations, including employee furloughs.
• Potential competition, including shifts in technology.
• Volatility in and deterioration of national and international capital markets and economic conditions.
• Global and local business conditions.
• Acts of war (including conflicts in Ukraine and the Middle East) and/or terrorism.
• Prices charged by competitors.
• Inability to retain key members of the management team.
• Inability to satisfy customer warranty claims.
• Outcome of any regulatory or legal proceedings, including with Coulomb Solutions Inc.
• Ability to realize benefits of the sale and leaseback transaction of the Union City Facility.

Future Outlook

The proposed merger is anticipated to create a leader in the medium-duty EV commercial vehicle market, offering a broader product portfolio, strengthened financial position, and long-term shareholder value. If the merger fails, Workhorse expects to face continued liquidity issues and potential restructuring, likely resulting in little to no equity value recovery.

Management Comments

• I believe this merger is the only viable path forward for our company and your investment in the company.
• Our Board looked at other paths forward over the last 18 months and thoroughly explored several other alternatives.
• Workhorse shares will only have meaningful value if you vote in support of the Motiv deal.
• If you don't vote to support the transaction, or you don't vote at all, the transaction will not go through and Workhorse will have to stand alone.
• If we go alone, we will likely continue to face liquidity issues and could have to pursue a restructuring, in which equity would likely recover very little or no value.
• Our agreement with Motiv provides the opportunity to participate in the potential upside of a leader in the medium-duty EV commercial vehicle market.
• Together, we can create a broader product portfolio, strengthen our financial position and create long-term shareholder value.
• Your vote is critical for helping us to do that.

Industry Context

The proposed merger aims to create a combined entity that is a leader in the medium-duty EV commercial vehicle market, positioning Workhorse to better compete and capitalize on the growing demand for electric commercial vehicles. This move reflects a strategic consolidation within the evolving EV sector to achieve scale, broaden product offerings, and strengthen financial stability.

Legal Proceedings

• Outcome of any regulatory or legal proceedings, including with Coulomb Solutions Inc., is listed as a risk.

Stakeholder Impact

• Shareholders: Direct impact on investment value; potential for significant loss if merger fails, opportunity for upside if merger succeeds.
• Employees: Potential difficulties in hiring or retaining employees as a result of the proposed transaction is listed as a risk. Furloughing employees is also mentioned as a risk related to cost control measures.
• Customers: Merger aims to create a broader product portfolio and strengthen financial position, potentially benefiting customers through improved offerings and stability.
• Suppliers: Supply chain disruptions are listed as a risk.
• Creditors: Liquidity issues and potential restructuring if the merger fails would impact creditors.

Next Steps

• Shareholders must vote to approve the merger with Motiv Power Systems, Inc.
• Shareholders are directed to www.votewkhs.com for voting information.
• The 2025 Annual Meeting of Stockholders will address the merger proposals.

Key Dates

Recommendation

The company explicitly states that the merger is the 'only viable path forward' and that shares will 'only have meaningful value' if the deal is approved, with a high likelihood of 'little or no value' in a restructuring if it fails. This strong warning suggests that the current investment is at significant risk without the merger. Therefore, the recommendation is to 'hold' the stock *contingent on voting for and the successful completion of the merger* to preserve existing value and participate in potential upside, as the alternative is presented as a 'strong sell' scenario. An investor should monitor the vote outcome closely.

Keywords

Workhorse Group Inc., Motiv Power Systems, Merger, EV Commercial Vehicle, Shareholder Vote, Liquidity Issues, Restructuring, Corporate Governance, SEC Filing, Electric Vehicles, Medium-Duty EV