Nikola founder urges vote against critical share proposal

10:58 pm Thursday, June 15th, 2023

By Abhirup Roy

SAN FRANCISCO (Reuters) – Nikola’s top shareholder and founder, Trevor Milton, on Thursday urged investors to vote against the electric truck maker’s proposal to increase the number of shares it is allowed to issue and called for a change in leadership.

Nikola said Milton’s social media post “misstates the facts,” adding in a statement to Reuters that the proposal to increase its share base could pass without his support.

Nikola postponed a vote on the plan to July 6, after failing to secure enough support at a shareholder meeting last week. The share issue is critical for the company which, like other electric vehicle makers, is facing a cash crunch and weak demand.

Milton founded the company nearly a decade ago but quit in September 2020 following claims of nepotism and fraud by a Wall Street short-seller. He was later convicted of fraud over allegations he lied to investors about Nikola’s technology.

In his first social media post in years on LinkedIn and Instagram, Milton said he voted “NO” on all of the company’s proposals with 50 million shares, including “WITHHOLD ALL” for all director re-elections, urging others to follow suit.

“The company does not need new shares, they need new leadership,” he said.

Nikola said Milton was violating agreements he made with the company during his departure to not vote against directors nominated by the board and solicit others to vote against any proposal, adding that its counsel would address “appropriate legal remedies.”

Nikola has been urging shareholders for weeks to vote in favor of its Proposal 2, saying “without these additional shares, Nikola’s ability to continue its ongoing operations and objectives, including Nikola’s need for capital, will be out of reach.”

The company received a delisting notice from the bourse last month for trading below $1 and has said it might execute a reverse stock split if its stock does not comply with Nasdaq’s minimum bid price requirements within a certain period.

Nikola shares have soared about 170% in just seven trading sessions after hitting a record low, crossing $1 on Wednesday and closing at $1.40 on Thursday. It has to trade above $1 for at least 10 consecutive days to comply with the rules.

(Reporting by Abhirup Roy in San Francisco; Editing by Sonali Paul)