Electric truck maker Nikola Corp. laid off 270 workers on Friday as its money to run the business dwindles. The measures came a day after convicted founder Trevor Milton shot the company’s management on social media.
The layoffs affected around 150 employees across multiple sites. They spent at least some of the time supporting the company’s manufacturing joint venture with European Iveco. Nikola cashed in the 50-50 joint venture in May in exchange for $35 million and the return of 20 million shares of the company.
Another 120 employees left company headquarters in Phoenix and Nikola’s assembly plant in Coolidge, Arizona. Nikola said he expects to save $50 million a year in employment costs from the moves. The company laid off 100 employees, or about 7% of its workforce in November.
Nikola’s cash burn will fall by 2024
Nikola said he expects its annual cash burn to fall below $400 million by 2024. The company had $208 million in cash as of March 31, of which $85 million was boundaries.
The layoffs reduced the total workforce to around 900 people amid eight days of a rise in the company’s share price. The streak ended Friday with a 15% decline to close at $1.19. The shares traded slightly higher in after-hours trading.
“We are proactively managing costs and reducing expenses. We are streamlining operations, including our organizational structure, to efficiently achieve our goals,” CEO Michael Lohscheller said in a press release.
Nikola is trying to get shareholder approval for a doubling of authorized shares to 1.6 billion from 800 million. Registering and selling the new shares would help Nikola pay interest on a $200 million hedge fund loan. The business does not have the cash to pay the interest.
Milton goes wild and Nikola fights back
On Thursday, doomed founder Trevor Milton urged shareholders to vote against the proposal, which would dilute the value of current shares. He said in posts on LinkedIn and Instagram that he voted his 50 million shares against Proposition 2 and urged investors who voted in favor to change their vote to no.
In a filing with the Securities and Exchange Commission on Friday, Nikola chastised Milton for misrepresenting facts and breaking his severance agreement requiring him to vote in favor of directors proposed by the board. Milton said he voted against all of the proposals in front of shareholders at Nikola’s virtual annual meeting on June 7.
“Mr Milton’s social media post on June 15 misrepresents the facts. Mr. Milton is unable to ‘block’ a proposal with his votes and has not ‘blocked’ the passage of Proposal 2,” the company said. “Even with his opposing votes on all proposals, five of the six proposals received the necessary votes for approval, demonstrating shareholders’ confidence in Nikola and its management.”
Did Milton violate his non-disparagement agreement?
Nikola has adjourned the annual meeting until July 6, when he will recount the votes on Proposition 2. Even if he falls short of the 400 million plus one proxy needed, Nikola is likely to prevail. The state of Delaware, where Nikola is incorporated, is expected to change its rule that would allow a proposal to pass by a simple majority of the votes cast.
“Society doesn’t need new action, it needs new leadership,” Milton wrote in his first social media post in nearly three years.
The comments may violate a non-disparagement clause in his September 2020 separation agreement from Nikola. Milton was indicted in July 2021 on federal securities fraud charges and sentenced in October 2022. He faces be sentenced on September 22.
“It would be easy for Mr. Milton to honor his agreements,” Nikola said in his filing with the SEC. “But his social media posts make it clear he won’t. This is not the first time Mr Milton has deliberately breached his obligations.
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