Electric truck maker Nikola Corp. laid off 270 workers Friday as its cash to run the business shrinks. The moves came a day after convicted founder Trevor Milton took shots at company leadership on social media.
The layoffs affected about 150 employees at multiple sites. They spent at least part time supporting the company’s manufacturing joint venture with Europe’s Iveco. Nikola cashed out of the 50-50 JV in May in exchange for $35 million and the return of 20 million shares of company stock.
Another 120 employees exited from company headquarters in Phoenix and Nikola’s assembly plant in Coolidge, Arizona. Nikola said it expects to save $50 million a year in employment costs through the moves. The company released 100 employees, about 7% of its workforce in November.
Nikola cash burn to fall by 2024
Nikola said it expected its annual cash burn to fall below $400 million by 2024. The company had $208 million in cash as of March 31, $85 million of which was restricted.
The layoffs reduced total headcount to about 900 against a backdrop of an eight-day run up in the company’s battered share price. The streak ended Friday with a 15% drop to close at $1.19. Shares traded slightly higher in after-hours trading.
“We are proactively managing costs and reducing expenses. We are streamlining operations, including our organizational structure, to efficiently execute our objectives,” CEO Michael Lohscheller said in a news release.
Nikola is trying to get shareholder approval for a doubling of authorized shares to 1.6 billion from 800 million. Registering and selling the new shares would help Nikola pay interest on a $200 million hedge fund loan. The company does not have the cash to pay the interest.
Milton lashes out and Nikola fires back
On Thursday, convicted founder Trevor Milton urged shareholders to vote against the proposal, which would dilute the value of current shares. He said in posts on LinkedIn and Instagram that he voted his 50 million shares against Proposal 2 and urged investors who voted in favor to change their votes to no.
In a Securities and Exchange Commission filing on Friday, Nikola chided Milton for misrepresenting facts and breaking his severance agreement requiring he vote in favor of directors put forward by the board. Milton said he voted against all proposals before shareholders at Nikola’s virtual annual meeting on June 7.
“The social media post made by Mr. Milton on June 15 misstates the facts. Mr. Milton is not able to ‘block’ any proposal with his votes and did not ‘block’ the passage of Proposal 2,” the company said. “Even with his opposing votes on all proposals, five out of the six proposals have received the necessary votes for approval, which demonstrates stockholder confidence in Nikola and its leadership.”
Did Milton violate his non-disparagement agreement?
Nikola adjourned the annual meeting until July 6 when it will count the votes on Proposal 2 again. Even if it falls short of the 400 million plus one proxies needed, Nikola is likely to prevail. The state of Delaware, where Nikola is incorporated, is expected to change its rule that would allow a proposal to pass based on a simple majority of votes cast.
“The company does not need new shares, they need new leadership,” Milton wrote in his first social media post in nearly three years.
The comments could violate a non-disparagement clause in his separation agreement from Nikola in September 2020. Milton was indicted in July 2021 on federal securities fraud charges and convicted in October 2022. He faces sentencing Sept. 22.
“It would be easy for Mr. Milton to comply with his agreements,” Nikola said in its SEC filing. “But his social media posts make it clear he will not. This is not the first time Mr. Milton willfully violated his obligations.”
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Click for more FreightWaves articles by Alan Adler.
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