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Nikola finally gets the votes to pass its share proposal

4th try gives startup the ability to issue new shares to raise money

Nikola finally got enough shareholder votes to increase the number of authorized shares it needs to raise money to grow the business. (Photo: Nikola)

On its fourth try, Nikola Corp. finally collected enough votes to increase its pool of authorized shares, critical to raising money to scale the electric truck and hydrogen business.

About two of three votes cast — more than 211 million shares — were voted in favor of the proposal to increase the number of authorized shares to 800 million from 600 million, Nikola said late Monday.

 “We’re excited about the strong momentum we have generated heading into this critical period as we move forward on the production and delivery of battery-electric and hydrogen fuel cell trucks and the energy infrastructure to support them,” Nikola CEO Mark Russell said in a release issued after the virtual shareholder meeting that began June 1 concluded.

Indicted company founder Trevor Milton, Nikola’s second-largest shareholder, voted against the proposal. That forced Nikola to adjourn its meeting an unprecedented three times while a proxy solicitation firm chased down unvoted proxies urging their holders to vote in favor.

As Nikola activates the shares to get the cash it needs, the total number of outstanding shares will rise. That will dilute the value of current shares, especially for Milton, who owns about 11% of the company. But if the shares go up in price, the dilution would have less impact.

Nikola and founder become foes

Milton and Nikola have become nemeses since he resigned as executive chairman in September 2020 and gave up his board seat. He sold a significant chunk of his holdings, which topped 25% of all shares at one time. Milton also voted about 40 million shares that he co-owns with CEO Mark Russell against the proposal. Voting rights on those shares shifts to Russell next year.

Nikola and Milton attorneys are fighting over whether Nikola has a right to intervene in Milton’s trial, scheduled for Sept. 12 in New York.

The company also is in mediation with Milton, seeking reimbursement of a $125 million fine Nikola agreed to pay to the Securities and Exchange Commission because of Milton’s alleged fraudulent statements about Nikola’s technological progress and prowess. Prosecutors claim Milton lied to pump up Nikola’s stock price.

High bar to success

Because it required a change in Nikola’s bylaws, the share proposal needed a simple majority of nearly 420 million outstanding shares. On the first count, it had 42% of the votes needed. Each successive restart of the meeting brought the vote closer.

Nikola spent an undisclosed amount to have Alliance Advisors hunt down unvoted blocks of shares and smaller numbers held by retail investors. 

Coincidentally, Nikola used shares worth about 4.5% of the company on Monday to acquire struggling battery pack supplier Romeo Power. Nikola had set aside shares from its current authorization to make that deal.

Indicted founder claims Nikola violating his constitutional rights

Nikola founder Trevor Milton votes against share-diluting proposal

Nikola acquires Romeo Power to secure battery supply

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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.