San Pedro, CA – December 17: The first two zero-emissions electric trucks, from an order of 100 vehicles, delivered from the Nikola Corporation to Total Transportation Services at the Port of Los Angeles in San Pedro on Friday, December 17, 2021.
Brittany Murray | MediaNews Group | Getty Images
DETROIT – Nikola Corp. will ask for shareholder approval to further dilute the company’s stock by adding 200 million new shares to raise capital as it scales production of its first electric semitruck.
The company said the increase – from 600 million to 800 million shares – is in the “best interests” of the company and its shareholders, according to Nikola’s proxy statement filed Friday to the Securities and Exchange Commission.
If shareholders do not approve the increase during its annual meeting scheduled for June 1, the company said it “may be constrained in its ability to raise capital in order to support our business objectives, and may lose important business opportunities, including to competitors, which could adversely affect our financial performance and growth. “
Based on Nikola’s closing price Monday of $ 6.87 a share – down from a 52-week high of $ 19.52 – the company would raise about $ 1.4 billion in capital from the additional shares. Nikola’s stock has declined about 30% in 2022, including an 8.6% fall on Monday.
Nikola has about 414 million outstanding shares, according to FactSet.
Nikola CFO Kim Brady last month said the embattled electric vehicle company, which recently settled a federal probe that charged it with misleading investors, would “monitor equity capital markets closely and raise additional capital when appropriate in 2022.”
Nikola had a cash balance of $ 522 million at year-end, and it expects to spend between $ 295 million and $ 305 million in 2022. It also reported to have about $ 436 million of available liquidity through two equity lines.
Trevor Milton, founder of Nikola Corp., center, exits federal court in New York, US, on Thursday, July 29, 2021.
Angus Mordant | Bloomberg | Getty Images
Nikola last month projected it would generate revenue of between $ 90 million and $ 150 million in 2022 on deliveries of between 300 and 500 of its first battery-electric semitrucks – known as the Nikola Tre – to customers.
Nikola will also ask for shareholder approval of executive compensation, which includes annual salaries of $ 1 for each executive officer, according to Nikola Chair Stephen Girsky. However, the executives are being compensated in stock awards that are valued at millions of dollars.
For example, Nikola CEO Mark Russell’s total compensation was $ 5.6 million in stock awards in 2021, according to the filing. Russell owns 11.7% of the company, including shares co-owned with ousted Nikola founder and chair Trevor Milton, according to the filing.
Milton resigned from the company in September 2020 after short seller Hindenburg Research accused him of making false statements about the company’s technology to attract investors and partnerships.
Milton is scheduled to go on trial April 4 in Manhattan for allegedly defrauding investors in that company’s IPO, among other things.
– CNBC’s Lora Kolodny contributed to this report.