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On the shelf: Nikola may sell up to $1.2B in new stock

No specific timing, but electric truck maker has indicated capital raise is this year

Nikola has filed a shelf registration with the Securities and Exchange Commission to raise up to $1.2 billion through sale of newly issued shares. (Photo: Nikola)

Nikola Corp. is preparing for its long-anticipated capital raise, telling the Securities and Exchange Commission it plans to sell up to $1.2 billion in new shares.

Nikola was among the first electric transportation special purpose acquisition companies to go public in June 2020. Now it is the first to lay out plans for raising more money to keep its business going. Some other companies brought public by SPACs, such as Lordstown Motors Corp., need more money to scale their businesses.

Exactly when and how Nikola (NASDAQ: NKLA) will move is unclear. According to an S-3 filing with the SEC, known as a shelf registration, the electric truck manufacturer could offer senior debt securities, senior subordinated debt securities, subordinated debt securities, convertible debt securities and exchangeable debt securities. 

Any new shares issued would dilute the value of shares currently held.

Nikola shows hand in plan for capital raise of up to $1.2 billion

Nikola has said it will watch the market for the right time to raise new money. Proceeds would be used to continue work on a greenfield plant in Coolidge, Arizona, and build out its plan to make, sell and distribute hydrogen. Nikola expects to begin producing hydrogen-powered fuel cell trucks in late 2023. Regular production of battery-electric Class 8 Tre cabover models began March 21.

Taking pressure off shareholder proposal

The shelf registration takes some pressure off a shareholder proposal in June, in which Nikola is seeking to increase the number of authorized shares in the company to 800 million from 600 million. It has enough leeway to cover an equity offering with approximately 187 million shares of its present authorization unused. 

Passage of the shareholder proposal would provide new breathing room.

At Monday’s closing price of $10.54, Nikola would need to sell about 114 million new shares to raise the full $1.2 billion. But the company would get less because of investment banking fees or discounted sales. Nikola has two equity lines of credit with Tumim Stone Capital that allow it to raise a total of $600 million.

In a separate SEC filing last Friday, Nikola canceled its existing S-1 filing, which had a $100 million placeholder for a secondary offering of shares.

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Click for more FreightWaves articles by Alan Adler.

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.