Workhorse Group shares are rallying after the company entered into a note purchase agreement under which it will sell $200M aggregate principal amount of its 4.0% senior secured convertible notes due 2024 to two institutional lenders. The proceeds of the offering before expenses are expected to be approximately $194.5M and will be used to increase and accelerate production volume, advance new products to market, replace previous higher cost financings, and support current working capital and other general corporate purposes, Workhorse said in a statement earlier today. In addition, Workhorse has entered into an exchange agreement with the holder of its existing 4.5% convertible notes to exchange the full $70M outstanding principal amount of those notes for shares of the company’s common stock. After the closing and release of the proceeds, the company will have over $270M in cash available. The note purchase agreement provides that the notes will initially be convertible into common stock by the holders at $36.14 per share, which is a premium of 35% over the closing price of the common stock on Friday, October 9. “With this financing in place, we can more quickly advance our production efforts heading into 2021 by increasing our supply chain component volumes, hiring more manufacturing employees and automating certain sub-assembly processes,” said Workhorse CEO Duane Hughes. Shares of Workhorse Group are up 12%, or $3.25, to $30.02 in morning trading.