Nikola Corp., a producer of battery and hydrogen-electric trucks, has taken several steps to repay its debts and raise equity, including offering up to $100 million in a common stock sale.
The beleaguered company is still dealing with the aftershocks of its founder, Trevor Milton, being convicted of fraud for making exaggerated claims about the company’s electric truck technology. Milton is currently on bail while he appeals his conviction of a four-year prison sentence and must pay Nikola a penalty of $167.7 million. The drama has damaged the company’s reputation, which has led to a loss of investor confidence, financial troubles, and increased scrutiny of its operations.
Nikola produced and shipped 203 trucks to date this year, a record for the company, but it did so at a $481 million net loss. The truck maker has set a goal to sell 300 to 350 of its FCEV hydrogen-electric semi trucks by the end of 2024.
Nikola’s filings with the Securities and Exchange Commission Monday show a company that is trying to strengthen its financial position, but in doing so will likely dilute existing shareholders. Nikola intends to use the proceeds from the $100 million sale for working capital and general corporate purposes. Nikola noted that it will invest most of the proceeds in short- and medium-term financial instruments, but may also use some of the cash to “acquire or invest in a complementary business, assets or technologies.”
The company also filed Monday to resell up to 34.2 million convertible note shares, which would allow noteholders to convert their debt to equity and sell the resulting shares. While this wouldn’t create any cash flow for Nikola, it would give noteholders an exit strategy and access to liquidity.
Nikola last week managed to secure $65 million by selling stock to holders of its convertible notes, which temporarily increased the conversion rate for those notes until January 31, 2025. The current conversion price for noteholders is about $3.12 per share, whereas Nikola’s stock opened at $1.46 per share (which is down nearly 10% from pre-market trading).
As Nikola works to secure cash flow, it is also trying to get a handle on its debts. In the nine months ending September 30, Nikola recorded $656 million in total liabilities. The company appears to have chipped away at $39.4 million of that balance after fully repaying its Series B-1 Notes from an agreement dated August 19, 2024.
Correction: A previous version of this article misstated the status of Trevor Milton’s prison time.
