Nikola Seeks Shareholder Approval to Add 200 Million Shares of Common Stock to Tre’s Production Scale and Complete Plant Construction in Arizona


ZEV maker Nikola Corporation has shared plans to seek shareholder approval to dilute their current holdings to add 200 million new shares, which would raise approximately $1.5 billion based from its closing price on Friday. The startup plans to use the funds to ramp up production of its Tre BEV trucks and complete construction of its US manufacturing plant in Coolidge, Arizona.

Nikola Corporation (NKLA) is an American zero-emission vehicle (ZEV) developer that has publicly showcased a meteoric rise and fall induced by gravity down the hill of the automotive world.

The EV startup has a well-documented history of over-promising and under-delivering led by former CEO and plaintiff Trevor Milton, who will face trial on federal fraud charges next month. Nikola Motors has done its best to move on from its previous controversy after agreeing to a $125 million settlement deal with the SEC in late 2021.

The company also dropped its own lawsuit against Tesla over a patented semi-trailer design and focused on its Tre BEV trucks, which began first deliveries last December. Despite a slew of new executives coming in to clean up Milton’s mess, Nikola continued to struggle for one reason or another.

Last month, we reported that the company’s entire supply chain leadership team had left and a company-wide hiring freeze had been put in place. That being said, Nikola Motors’ letters of intent for Tre trucks and supply deals with major players like Proterra are keeping the remaining staff motivated to revitalize a startup that was once valued at $34 billion.

However, to distribute these Tre BEVs to customers, Nikola requires additional dilution of its common stock.

The Nikola Tre BEV truck / Source: Nikola Motors

Nikola executives engage in future stock valuation

According to a report by FreightWavesNikola Corporation is seeking shareholder approval to add 200 million shares of common stock to ramp up Tre production and ward off any hostile takeover attempts (although the company has said it is not at the stream of threats at the moment).

Currently, Nikola plans to build 300 to 500 Tre BEV trucks this year, starting in the second quarter. Nikola currently has a manufacturing joint venture partner in Europe with Iveco. The two share a redeveloped factory in Ulm, Germany. On US soil, Nikola is still finishing its $600 million plant in Coolidge, Arizona.

During its recent fourth quarter earnings call, Nikola executives shared that its cash on hand could fall to $225 million by the end of 2022. Nikola Corp. CFO Kim Brady said expressed during the call:

We plan to ensure that we continue to have sufficient liquidity to fund the next 12 months of operations throughout 2022. We will closely monitor the equity capital markets and raise additional capital as needed in 2022.

Given the latest news, Nikola’s strategy is to continue fundraising to buy more time to scale Tre’s production. Five Nikola executives, including Brady and CEO Mark Russell, agreed to a second year’s salary of $1 with no bonuses in exchange for stock awards in 2023.

At the end of 2021, Nikola had approximately 413 million shares outstanding, allowing it to issue more than 100 million new shares, even if current shareholders reject the proposed value dilution. However, in a proxy filing with the SEC on Friday, Nikola admitted that obtaining shareholder approval would allow him to skip a separate vote later:

The issuance of additional ordinary shares will reduce the relative percentage of share ownership of our existing shareholders, thereby diluting the voting power of their ordinary shares and, depending on the price at which the additional shares are issued, may also have a diluting effect on any future earnings per share of our common stock

Shareholder approval is expected to raise $1.5 billion based on Nikola’s closing price on Friday, which is more than enough for the billion dollars Brady expects Nikola needs to cover its ramp-up. Manufacturing. Whether or not Nikola gets approval for the stock expansion, it’s clear he’s fighting to survive, taking one last hit for the fences to sell and manufacture those Tre trucks.

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