Nikola Corp. became the latest transportation startup to get a delisting warning from the Nasdaq because its share price has lingered below $1 for 30 consecutive days.
The electric truck maker and hydrogen developer has at least 180 days to get its share price up or be forced to trade over the counter (OTC) as a Pink sheet. The OTC has far less liquidity than the major exchanges.
Nikola shares tumbled 22% intraday Thursday to an all-time low of 60 cents following an 8-K filing with the Securities and Exchange Commission.
The company has time but few options to influence its flagging share price.
Separately, Nikola on Wednesday evening offered $12 million in senior notes due in May 2024 paying 5% interest.
It continues working toward production of hydrogen fuel cell-powered Class 8 trucks for customer deliveries in the fourth quarter. The company has paused production while it configures its plant in Coolidge, Arizona, to build fuel cell trucks on the same line with battery-powered models.
Nikola started battery truck production last year but has decided to focus on fuel cells and will only build battery-powered trucks by special order.
Reverse stock split is an option
On Monday, startup electric commercial pickup truck maker Lordstown Motors Corp. approved a 1:15 reverse stock split that raised its share price but had no impact on its financial condition. Without the split, the Nasdaq could have removed Lordstown from trading on Friday.
In Nikola’s case, its near-term survival rests on a shareholder proposal to double the number of the company’s outstanding shares to 1.6 billion from 800 million. Cash-strapped Nikola does not have funds to pay interest on $200 million in loans it took from hedge fund Antara Capital last year. The vote on the proposal is June 7, and it requires a 50% plus one vote approval to pass.
A smaller increase in authorized shares — from 600 million to 800 million — finally passed on a fourth try last year. At that time, founder and former Executive Chairman Trevor Milton voted his shares and shares co-owned with former CEO Mark Russell against the proposal. Milton faces sentencing June 21 on fraud convictions from a federal trial in 2022.
This year, Russell gets to vote those jointly owned shares. It’s unclear what he will do since he recently left the Nikola board after stepping down as CEO in November 2022 instead of this January as planned because the board questioned the optics of Russell cashing out millions of dollars in stock options while he was running the company.
Could Iveco be a white knight for Nikola?
Even if Proposal 2 fails, Nikola could execute a reverse split to raise the price of its shares, unless they continue to fall in value, which could hasten the sale of the company or a bankruptcy. Nikola recently sold its 50% stake in a joint manufacturing venture with Europe’s Iveco for $35 million and the return of 20 million shares.
Iveco CEO Gerrit Marx declined to run for reelection to Nikola’s board, severing a key Iveco connection with Nikola. With the formal dissolution of the JV, Iveco could be poised as a buyer for Nikola, gaining entry to the U.S. trucking market at a price far below the $3.7 billion that Traton Group paid to acquire Navistar International in 2021.
Related articles:
Nikola cashes out European JV and refocuses on fuel cells at home
Nikola gets financial partner for 50 hydrogen stations
Analysis: How would a Nikola failure affect hydrogen’s prospects
Click for more FreightWaves articles by Alan Adler.
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