Electric truck maker Nikola Corp. fired 270 workers on Friday as its money to run the company shrinks. The moves came a day after convicted founder Trevor Milton shot at the company's leadership on social media.
Around 150 employees at several locations were affected by the layoffs. They spent at least part of their time supporting the company's manufacturing joint venture with European Iveco. Nikola exited the 50-50 joint venture in May in exchange for $35 million and the return of 20 million shares of the company's stock.
Another 120 employees left the company's headquarters in Phoenix and Nikola's assembly plant in Coolidge, Arizona. Nikola said the measures are expected to save $50 million a year in labor costs. The company laid off 100 employees in November, about 7% of its workforce.
Nikola's cash consumption is set to decrease by 2024
Nikola said it expects its annual cash burn to fall below $400 million by 2024. As of March 31, the Company had $208 million in cash of which $85 million was restricted.
The layoffs reduced the total workforce to around 900, while the company's share price took a hit for eight days. The streak ended Friday down 15% to close at $1.19. Shares traded slightly higher in after-hours trading.
“We proactively manage costs and reduce expenses. We are streamlining operations, including our organizational structure, to efficiently achieve our goals,” said CEO Michael Lohscheller in a press release.
Nikola is trying to get shareholder approval for a doubling of authorized shares from 800 million to 1.6 billion. The registration and sale of the new shares would help Nikola pay interest on a $200 million hedge fund loan. The company does not have the funds to pay the interest.
Milton punches and Nikola shoots back
On Thursday, doomed founder Trevor Milton urged shareholders to vote against the proposal, which would dilute the value of current shares. In posts on LinkedIn and Instagram, he said he voted against Proposition 2 with his 50 million shares and urged investors who voted in favor to change their votes to “no.”
In a filing with the Securities and Exchange Commission on Friday, Nikola accused Milton of misrepresenting facts and violating his severance agreement, which required him to vote for the board's proposed directors. Milton said he voted against all of the proposals at Nikola's virtual annual meeting on June 7 in front of shareholders.
“Mr. Milton's social media post of June 15 misrepresents the facts. Mr. Milton's votes are incapable of ‘blocking' any proposal, nor did he ‘block' the passage of Proposal 2.” said the company. “Despite his dissenting votes on all proposals, five of the six proposals received the necessary votes for approval, showing shareholder confidence in Nikola and his leadership.”
Did Milton violate his non-libel agreement?
Nikola adjourned the annual meeting to July 6th to recount the votes on Proposal 2. Even if the number of required 400 million plus one is not reached, Nikola will probably 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.
“The company doesn't need new stock, it needs new leadership,” Milton wrote in his first social media post in nearly three years.
The comments could violate a non-disturbance clause in his September 2020 breakup agreement with Nikola. Milton was charged with federal securities fraud in July 2021 and convicted in October 2022. He faces a conviction on September 22nd.
“It would be easy for Mr. Milton to honor his agreements,” Nikola said in his SEC filing. “But his social media posts make it clear he won't do that. This is not the first time Mr Milton has willfully failed in his duties.”
Nikola's share increase proposal fails to garner required votes
Nikola breaks away from European joint venture and refocuses on fuel cells at home
Analysis: How Would Nikola Failure Affect Hydrogen Prospects?
Click here to view Alan Adler's other FreightWaves articles.
The post Nikola cuts 270 jobs as money to survive is running out appeared first on FreightWaves.