Nikola, the electric truck manufacturer, announced on Thursday that it had successfully garnered enough support for a proposal to increase the number of shares it can issue, paving the way for much-needed capital infusion.
The company had faced challenges during its shareholder meeting, having to adjourn the session twice due to a lack of sufficient votes. Despite urging shareholders for months to vote in favor of “Proposal 2,” which aimed to authorize additional share issuance, Nikola struggled to secure the necessary support. However, the approval of this proposal was crucial for the company’s ongoing growth and success, according to CEO Michael Lohscheller.
Details of the voting outcome were not provided in the announcement.
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The move comes as Nikola, like many other electric vehicle (EV) peers, has been grappling with a cash crunch, leading to production setbacks and cost-cutting measures. In June, the company implemented layoffs and liquidated assets of a recently acquired EV battery maker in an effort to reduce cash burn. Additionally, Nikola decided to focus on hydrogen fuel cell trucks and build battery electric trucks only on demand.
Investors have closely monitored the cash reserves of Nikola and other EV manufacturers, expressing concerns about potential share dilutions through further share disposals to raise funds.
Notably, Nikola’s founder and top shareholder, Trevor Milton, was among the vocal opponents of the proposal. Milton, who left Nikola in 2020 following fraud allegations, has also called for a change in leadership within the company.
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Nikola’s upcoming second-quarter results, expected to be reported on Friday, are anticipated to show a 15% decline in revenue and widening losses.
Following the news of the proposal approval, Nikola’s shares, which had experienced a significant 60% surge this year, fell by 3.7% in after-hours trading. The company’s efforts to secure shareholder support signal a step forward in its pursuit of necessary funds amid ongoing challenges in the EV market.
