Nikola Corp., a maker of battery and hydrogen-electric trucks, has taken several steps to pay down its debt and raise equity, including offering up to $100 million in common stock.
The beleaguered company is still dealing with the aftershocks of its founder, Trevor Milton, being convicted of fraud for making exaggerated claims about the company’s electric truck technology. Milton is currently out on bail while he appeals his four-year prison sentence and pays Nikola a $167.7 million fine. The tragedy has damaged the company’s reputation, leading to a loss of investor confidence, financial problems and increased scrutiny of its operations.
Nikola produced and shipped 203 trucks so far this year, a record for the company, but did so at a net loss of $481 million. The truck maker has set a goal of selling 300 to 350 FCEV hydrogen-electric semi-trucks by the end of 2024.
Nikola’s filings with the Securities and Exchange Commission on Monday show a company trying to strengthen its financial position, but likely diluting existing shareholders in the process. Nikola plans to use the $100 million proceeds from the sale for working capital and general corporate purposes. Nikola noted that it will invest most of the proceeds in short- and medium-term financial instruments, but that it may also use some of the money to “acquire or invest in additional businesses, assets or technologies.”
The company also filed on Monday to resell up to 34.2 million convertible bond shares, which would allow bondholders to convert their debt into equity and sell the resulting shares. While this would not generate cash flow for Nikola, it would give bondholders an exit strategy and access to liquidity.
Nikola managed to secure $65 million last week by selling shares to holders of its convertible bonds, temporarily raising the exchange rate for those bonds until January 31, 2025. The current conversion price for bond holders is about $3. 12 per share, while Nikola’s stock opened on January 31, 2025. $1.46 per share (which is almost 10% lower than pre-market trading).
As Nikola works to secure cash flow, it is also trying to get a handle on its debt. In the nine months ended September 30, Nikola recorded $656 million in total liabilities. The company appears to have eliminated $39.4 million of that balance after fully redeeming its Series B-1 Notes under an agreement dated August 19, 2024.
Correction: An earlier version of this article misstated Trevor Milton’s prison status.
