CEO and founder of U.S. Nikola, Trevor Milton speaks during presentation of its new full-electric and hydrogen fuel-cell battery trucks in partnership with CNH Industrial, at an event in Turin, Italy December 2, 2019.
Massimo Pinca | Reuters
Electric truck startup Nikola is making another attempt Thursday to clear a shareholder hurdle to raise new funds – over the objections of its disgraced and now-departed founder.
The long-embattled company is seeking to raise money by issuing new stock, a process that requires shareholder approval. Nikola’s June 1 annual shareholder meeting was abruptly adjourned after its founder and former CEO and chairman, Trevor Milton, voted against the proposal.
The company has spent the past month rallying shareholders to vote for the proposal in sufficient numbers to overcome Milton’s “no” vote. The final vote tally will be announced when Nikola’s shareholder meeting reconvenes at noon ET.
Milton remains Nikola’s largest shareholder. He owns 11% of the company’s stock outright and controls roughly 9% more via an investment vehicle that he co-owns, giving him effective control of about 90 million shares in total.
Votes representing roughly 95 million shares were cast against the share-increase proposal as of June 1. Milton’s “no” vote was first reported by Bloomberg.
Nikola isn’t in urgent need of cash, but the flexibility to sell more stock is important to its future. Nikola raised $200 million via a convertible note issue in May, and it had $385 million in cash and another $409 million available via an equity line from Tumim Stone Capital as of March 31, for a total of about $1 billion on hand.
CFO Kim Brady said in May that with the convertible note sale, Nikola had ample cash on hand to fund its operations for at least another year without additional raises. But the company is burning about $180 million per quarter, and a share offering was built into its plans for later this year, Brady said at the time.
Approval of the proposal requires “yes” votes from a majority of the company’s outstanding shares. As of the June 1 meeting, 64% of the total votes cast were in favor of the share-increase proposal. But that 64% represented only 42% of the company’s outstanding shares, not enough to pass the measure over Milton’s objection.
Milton, who founded the electric heavy-truck company in 2015, left Nikola in September of 2020 after short-seller Hindenburg Research accused him of making false statements about the company’s technology to investors. A federal grand jury indicted him on three counts of fraud in 2021, and a fourth count was added last week. His trial is scheduled to start in July.
Federal prosecutors have alleged that Milton built an elaborate scheme intended to boost Nikola’s stock for his own gain, by lying about the company’s technology, the state of its product development, and its likely future sales prospects.
Denial of responsibility! galaxyconcerns is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected]. The content will be deleted within 24 hours.