Workhorse Group Inc., the small Ohio company paired with VT Hackney to compete for the multi-billion-dollar U.S. Postal Service advanced mail truck contract, said the team has broken up.
Workhorse said will pay VT Hackney $7 million for certain intellectual property and engineering assets and that the companies are no longer working together. The two companies designed several prototypes of an electric mail truck that underwent Postal Service testing.
The split comes as the Postal Service gets ready to offer a manufacturing request for proposal to one or more of the teams competing to build the next-generation mail truck. The contract to supply 180,000 new vehicles is expected to be worth more than $6.3 billion. The agency is scheduled to put out the RFP in the coming weeks.
“We announced during our November Board meeting that the RFP would be released by the end of the year,” Postal Service spokeswoman Kim Frum said in an email.
The work could go to one company or be split among several manufacturers.
It’s not clear whether the split with VT Hackney will affect Workhorse’s chances of landing the contract.
“While the two companies get along and are friendly with each other, we do not have any active relationship at this point,”said Duane Hughes, chief executive of Workhorse, based in Loveland, Ohio.
Workhorse deposited $1 million in cash and $6.6 million worth of its common stock in an escrow account. To close the deal, which was disclosed in a recent regulatory filing, certain conditions have to be met. Hughes declined to disclose details.
“The closure is dependent upon a couple of, I will call them inflection points, that haven’t been publicly made available,” he said. “It’s not a matter of public record what we are doing, but it’s something exciting for us when it does happen.”
The first $1 million is due “upon satisfaction of certain conditions,” according to the filing. The remaining $6 million “shall be payable in cash within 45 days if certain additional conditions are attained,” it said. If that second cash payment is not made within 105 days, the stock in the escrow account will be due to VT Hackney.
Executives at VT Hackney did not return several calls asking about the deal.
VT Hackney, now ST Engineering Hackney Inc., was one of six prime contractors awarded a total of $37.4 million in September 2016 to design and build working mail truck prototypes. Half of the prototypes were to feature hybrid and new technologies, including alternative fuel capabilities such as electric and hybrid powertrains.
Two competitors have dropped out.
Still in the running are the Oshkosh/Ford team, the North America arm of India’s car giant, Mahindra, and Turkey’s Karsan, which has teamed with Morgan Olson. Workhorse was the subcontractor on the VT Hackney prototype program. It supplied the electric powertrain and chassis. VT Hackney built the body.
Workhorse, a micro-cap company with few sales and a negative cash flow, has been working to raise enough money to get its new electric delivery van into production.
This year it has signed a flurry of deals to sell, license or set up other arrangements for assets that are no longer its core focus, which is now its last-mile electric delivery van.
Workhorse will license its hybrid-electric pick-up truck technology to company founder, Steve Burns. He left the company a year ago to start Lordstown Motors Corp. It plans to build a fully electric pick-up truck. Workhorse has a 10 percent stake in LMC. Workhorse recently closed the sale of its SureFly hybrid-electric multi-copter prototype and technology to Moog Inc. The two companies also formed a joint venture to further develop Workhorse’s truck-based delivery drone, the HorseFly.
“When people ask me about the Post Office, I would tell you, yes it could be very important but it’s also very important that, should we not win that Postal contract, that we still have a very good, successful business here that we are moving forward,” Hughes said.