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Image Credits: Nikola Corp.
Nikola failed for the second time since June to get enough shareholders to vote on a proposal that would allow the EV truck maker to issue more shares in a bid to raise more capital.
The company said Thursday it adjourned its annual meeting of shareholders until August 3 when it will try once more to attract enough shareholders to vote for the measure. The company is required to secure more than 50% of all outstanding shares to vote in favor of the proposal.
Nikola failed to get enough votes at its June 7 meeting and pushed the vote to July 6.
This next time may prove fruitful for Nikola thanks to a change in Delaware law that’s expected to go into effect August 1. Under the change, companies incorporated in Delaware that want to increase the number of shares would only need to receive a simple majority of the votes cast. Amendment to the existing law has been approved by Delaware’s state legislature and is now awaiting Gov. John Carney’s signature.
Nikola said that had the new law been in place, its proposal to issue more shares would have passed.
Nikola is among a group of EV and mobility startups that went public via mergers with special purpose acquisition companies before generating revenue, never mind being profitable. Many of these, notably Nikola, were swept up in the meme stock craze during the pandemic and saw shares — and market cap — jump into the stratosphere. All of these stocks have come crashing back down to earth, leaving EV SPACs like Nikola scrambling for cash.
Nikola has also sought ways to reduce costs. In May, the company laid off 270 employees, or about 23% of its workforce, and announced plans to restrict electric truck efforts to North America. About 150 workers who were supporting the company’s European programs were laid off. Another 120 employees based at the company’s Phoenix and Coolidge, Ariz., sites also lost their jobs. About 900 employees remain.
