Nikola Corp.’s extraordinary campaign urging shareholders to vote to increase the number of authorized shares again fell short Thursday. But the tally was close enough that the electric truck startup will try once more in July.
The company wants more flexibility to raise money to scale the company’s electric truck and hydrogen business. The proposal calls for a 33% increase from 600 million to 800 million shares. Nikola has only 33 million unencumbered shares from its current 600 million-share authorization.
Indicted company founder Trevor Milton voted against the proposition. Milton owns about 11% of the company shares and has voting rights to another large block he co-owns with CEO Mark Russell. New shares would significantly dilute Milton’s stake in the company.
Milton faces trial Sept. 12 on three federal fraud charges related to false claims he made about the company’s technology progress and prowess to boost Nikola’s stock price. A fourth charge added last week relates to offering stock options with implied assurances of appreciation as partial payment for a land deal in Utah.
Nikola counts 48% of proxies in favor of proposal
As of Thursday, more than 48% of outstanding shares were voted in favor of the proposal, which was the subject of video pleas by Russell and Chairman Steve Girsky in recent days. The proposal needs 50% plus one vote to pass.
Nikola adjourned its annual meeting a second time to keep pressing for the remaining votes it needs to pass the proposal. Proxies for more than 112 million shares have not yet been voted.
Without mentioning Milton’s name, Nikola said in a statement that the measure is progressing “with the exception of the vote of a stockholder who appears to represent more than 85% of the votes against Proposal 2.”
Said Russell: “We strongly urge stockholders to approve the increase in the authorized number of common shares to provide flexibility to support the future growth and development of our business.”
Nikola adjourned the virtual annual meeting on June 1 and again on Thursday. It resumes July 18. Shareholders have until 11:59 p.m. EDT on July 17 to cast their votes on the proposal.
Nikola hired a proxy solicitation firm to encourage voting. The company declined to say how much it is spending to return a favorable vote on the proposal.
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Indicted Niola founder votes against share-diluting proposal