Nikola Corp. filed a $100 million public offering of company stock. with a private buyer agreeing to buy shares the company cannot sell.
Investors drove shares in the electric truck and hydrogen fuel startup to an all-time low in after-hours trading Thursday. Nikola trades on the Nasdaq under the symbol NKLA.
Nikola starved for operating cash
Starved for cash, Nikola plans to produce hydrogen-powered fuel cell electric trucks (FCEVs) for sale in the fourth quarter. The company said Wednesday it has orders for the first 100 zero-emission Tre FCEVs, which cost up to $750,000 each before incentives.
Nikola filed the offering with the Securities and Exchange Commission on Tuesday. The company listed just under 250 million shares for the offering, suggesting a price of about $2.50 a share. The offering has not yet been priced.
In a news release, Nikola said bankers at Citigroup could sell up to $15 million in additional shares. That’s if the offering sells out.
The company entered a separate $400 million at-the-market arrangement with Citigroup in August allowing it to sell shares at market price. Earlier in August, after three tries, Nikola got enough votes to increase its number of authorized shares to 800 million from 600 million.
Founder Trevor Milton, the company’s largest shareholder, voted against the measure because of the potential dilution.
Offering would dilute current shareholders
Adding these shares to the approximately 487.5 million outstanding shares creates significant dilution for current holders. That could explain the after-hours sell-off that pushed shares down as much as 7.1% to $1.30 per share.
Nikola filed a notice of going concern with the SEC as part of its year-end 2022 required filing. Company auditors said that despite having three measures in place to sell stock for operating cash, Nikola could not count on the equity arrangements. The company had $323 million in cash at the end of 2022.
Chief Financial Officer Kim Brady, who announced his retirement on Monday, dismissed the notice of going concern as “accounting language” in a Feb. 26 interview with FreightWaves.
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