After three efforts and a modification to Delaware law, Nikola company, a manufacturer of electric trucks, was successful in getting enough shareholders to approve a proposal that will enable it to issue new shares.
Nikola company reported on Thursday that the motion authorizing the board to issue more shares had received the necessary number of votes to approve. If investors take notice, Nikola could be able to raise the money it claims it needs to maintain operations and ramp up commercial production.
Required more than 50% of all outstanding shares
In the past, companies with Delaware corporate incorporation required more than 50% of all outstanding shares to support a request to issue additional shares. The new rule, which took effect on August 1, reduces the threshold for approval of firms to a simple majority of votes cast.
“We are immensely grateful for the unwavering support and confidence our stockholders have demonstrated in Nikola company with the passage of all of this year’s Proposals,” Nikola CEO Michael Lohscheller said in a statement. “This positive outcome, particularly with respect to Proposal 2, was critical for continued growth and success as we move forward with our strategic priorities, including autonomous technologies and software, our HYLA hydrogen ecosystem, and the recent launch of the Nikola hydrogen fuel cell electric vehicle.”
Special-purpose acquisition companies
Nikola company is among a group of EV and mobility startups that went public via mergers with special-purpose acquisition companies before generating revenue. Many of these, with Nikola leading the pack, were swept up in the meme stock craze during the pandemic and saw shares — and market cap —skyrocket. All of these stocks have come crashing back down to earth, leaving EV SPACs like Nikola scrambling for cash.
During the epidemic, many of these, Nikola company leading the pack, saw their shares and market caps soar as a result of the meme stock mania. EV SPACs like Nikola are under a cash crunch as a result of the collapse of all of these equities.
Nikola company also reduced expenses. In May, the firm revealed plans to focus its efforts on electric trucks in North America and let go of 270 individuals, or around 23%, of its workforce. The corporation cut off 150 employees who supported its European programs. At the company’s Phoenix and Coolidge, Arizona locations, an additional 120 workers lost their employment. There are still about 900 workers.
At its meetings on June 7 and July 6, Nikola failed to garner enough shareholders to cast a vote.