Home Book trading Nikola still has no vote for the stock issue plan opposed by founder Trevor Milton

Nikola still has no vote for the stock issue plan opposed by founder Trevor Milton

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US Nikola CEO and Founder Trevor Milton speaks during the presentation of his new all-electric battery and hydrogen fuel cell trucks in partnership with CNH Industrial, at an event in Turin, Italy, on December 2, 2019.

Massimo Pinca | Reuters

Electric truck maker Nikola has once again failed to win shareholder approval to raise new funds, the company said on Monday. The measure has so far been blocked by the company’s founder, who has since died.

In a brief webcast on Monday, Chairman Steven Girsky said that while the vote on the new stock issuance proposal is closer than it was a few weeks ago, the count is still below the 50% outstanding shares needed to pass. The meeting is adjourned until August 2.

Shares of Nikola were roughly flat in after-hours trading after the meeting ended.

Nikola seeks to raise funds by issuing new shares, a process that requires shareholder approval. The company’s June 1 annual shareholder meeting was adjourned after its founder and former CEO and chairman, Trevor Milton, voted against the proposal. The meeting briefly resumed on June 30, only to be adjourned again as the proposal still had not received the necessary votes.

Milton left the company amid fraud allegations in 2020, but remains Nikola’s largest shareholder. He owns 11% of the company’s stock and controls about 9% more through an investment vehicle he co-owns, giving him control of about 90 million shares of Nikola.

In order to pass the new share proposal, 50% of Nikola’s outstanding shares must be voted in favor. As of July 18, Girsky said, the vote was within 0.5%, or less than 1.6 million shares, of the vote.

Nikola is not in immediate danger of running out of cash, but the freedom to issue new shares would give him financial flexibility. Chief Financial Officer Kim Brady said in May that the company has enough cash to fund operations for at least a year. But he also noted Nikola was burning about $180 million per quarter, and then said a stock offering had been baked into his plans for later in 2022.

As of March 31, Nikola had $385 million in cash and an additional $409 million available through a capital line from Tumim Stone Capital. It raised an additional $200 million through a convertible note issuance in May.

Milton, who founded Nikola in 2015, left abruptly in September 2020 after short seller Hindenburg Research accused him of making false statements to investors about the company’s technology and backlog.

A federal grand jury has since indicted Milton on four counts of fraud related to statements he made to investors about Nikola’s business. His trial is currently due to begin in September. Milton denied the allegations.

Nikola will release its second quarter results before US markets open on August 4.

Correction: This article has been updated to correct Kim Brady’s pronouns.