(Bloomberg) — Nikola Corp.’s founder and former chair Trevor Milton voted against a proposal by the clean-energy trucking startup that would have authorized new shares to potentially raise capital, throwing the outcome into doubt, according to people familiar with the matter.
Milton’s vote led to the decision announced late Wednesday to immediately adjourn Nikola’s annual shareholder meeting to June 30 so the company could work on soliciting more proxies in favor of the proposal, the people said, asking not to be identified discussing private information.
An attorney who represents Milton didn’t return calls seeking comment.
Approval requires a majority of outstanding shares. While 64% of votes cast so far were in favor of the share issuance, that represented only 42% of shares outstanding, not enough to pass the measure without Milton’s approval or additional support from retail stock owners.
Milton is Nikola’s single largest shareholder with more than 11% of the stock. He effectively controls about 20%, or almost 90 million shares, through common stock he holds directly and an investment vehicle he co-owns, giving him the power to stop measures if a large chunk of Nikola’s largely retail stockholder base doesn’t vote in favor. About 95 million shares voted against the new-share issue.
The company’s proposal would increase the number of shares outstanding by 200 million to 800 million, which would give Nikola the green light to sell equity and raise cash at any time going forward.
It’s not clear what Milton stands to gain by thwarting the company’s efforts to raise money. He would prevent his own stake from being diluted, but he could also impair its growth prospects by limiting the company’s ability to raise capital at a time when debt markets are getting frosty for startups. Nikola has agreed to pay his legal fees as part of his severance.
Milton will go on trial next month to face charges of misleading investors by overstating the company’s technological capability and business prospects when he was running the company. He resigned from Nikola in 2020 and was subpoenaed as part of an investigation by the Department of Justice.
Nikola raised $200 million in convertible notes in early May and wanted to maintain options as the company works to get its electric and hydrogen fuel cell trucks into mass production. With $385 million in cash and $409 million in equity lines with Tumim Stone Capital, the company had access to about $1 billion in liquidity at the end of the first quarter.
If Nikola needs more cash, it could sell more equity but needs majority shareholder approval. With Milton opposed, the company will need to go out and find support from retail shareholders and other owners who didn’t vote. The company is planning to do that if Milton won’t get on board with the plan, said one of the people, who asked not to be identified because the plans haven’t been disclosed.
The company said in February that it started a pilot program with Anheuser-Busch InBev SA to start work with hydrogen fuel cell trucks and expected to build as many as 500 electric semi trucks.
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