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Nikola cuts deal for $200M through sale of senior debt

Antara Capital lends money to startup at 8% cash or 11% interest in stock through 2026

Nikola cut a deal for $200 million cash in exchange for senior debt that matures in 2026. (Photo: Alan Adler/FreightWaves)

Nikola Corp. cut a deal for $200 million in cash with an investor, offering convertible notes that can be paid off in cash or discounted shares. The startup is rounding up new money for the production ramp of electric trucks at a new plant where it provided tours last week.

The startup also tapped an equity line of credit with Tumim Stone Capital for an additional $196 million. It exchanged about 28.8 million new shares of stock. That would be the proceeds based on Monday’s $7 closing price of Nikola shares, according to a filing with the Securities and Exchange Commission.

“We have been clear about the fact that we’re going to continue to raise capital and we’re going to stay 12-plus months ahead of our spending,” CEO Mark Russell said in an interview last week at a launch program for the Class 8 Tre battery-electric truck. “That’s our strategy. The good news is that starting this quarter we’re going to have revenue to offset.”

Nikola (NASDAQ: NKLA) went public in a merger with special purpose acquisition company VectoIQ in June 2020. It has yet to report any meaningful revenue. Nikola projects it will book about $25 million from the sale of 300 to 500 electric trucks this year.

Nikola gets cash for debt

Antara Capital agreed to purchase $200 million in convertible senior debt with cash interest of 8% or 11% interest if paid in Nikola stock. Nikola can choose how to repay the loan, which matures in May 2026 — cash, stock or a combination. The loan restricts Nikola from other borrowing beyond $500 million with some exceptions, according to an SEC filing.

The company last week activated a shelf registration of shares that could raise up to $1.2 billion.

Nikola is ramping production at its plant in Coolidge, Arizona. It is going from one vehicle a day to five per day by the end of the year. It has orders and letters of intent for several hundred of the electric trucks. Depending on the load being hauled, weather and other conditions, the Tre can travel up to 350 miles on a single charge.

Workers inspect underside of white Nikola Tre Class 8 electric truck.
Nikola workers inspect the underside of a battery-electric Class 8 Tre at the plant in Coolidge, Arizona. (Photo: Alan Adler/FreightWaves)

Hydrogen fuel cell versions of the Tre also are in pre-production at the plant. Nikola will package leases of the truck, maintenance and seven years of fuel beginning late in 2023.

Additionally, Nikola needs money to begin building hydrogen fueling stations and to develop the fuel.

“We believe Nikola is at an inflection point as we see our customer momentum accelerating, which requires scaling of our operations and investments in the hydrogen infrastructure build-out,” Russell said in a press release Monday.

Antara’s investment is part of a strategy to strengthen Nikola’s base of institutional investors over the long term, Chief Financial Officer Kim Brady said.

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Alan Adler

Alan Adler is an award-winning journalist who worked for The Associated Press and the Detroit Free Press. He also spent two decades in domestic and international media relations and executive communications with General Motors.