Nikola attracts $200M investment from institutional investor

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• Nikola Corporation (NASDAQ:NKLA) announced that an institutional investor Antara Capital has agreed to make a $200 million investment in Nikola through the purchase of convertible senior notes.
• The notes are due in 2026 and will bear interest at a rate of 8.00% if paid in cash or at a rate of 11.00% through the issuance of additional notes at NKLA's election.
• The notes will be convertible at an initial conversion price to be determined prior to closing. The initial conversion price will represent a 30% premium to the lower of Nikola's volume-weighted average price over a pre-determined time period between this announcement and closing of the notes and the closing price of Nikola stock on the last trading day prior to the date of this announcement, but will not be lower than 110% of such closing price.
• Nikola CEO Mark Russell said the company believes that it is at an inflection point as it sees customer momentum accelerating. That momentum is said to require scaling of operations and investments in the hydrogen infrastructure build-out.
• Nikola intends to use the proceeds from the sale of the notes along with its other liquidity sources for business expansion in the form of scaling truck manufacturing and tooling setup, accelerating the development of its hydrogen infrastructure, as well as for general corporate purposes.
• Shares of Nikola added 0.75% in the premarket session but still trade well below the 200-day moving average.

Comments

[munhoi]

Hidenberg was right they did not disappoint from being now a scam dilution machine throwing all existing shareholder sunder in this case under their trucks

[apineda7000]

Buy….Simple….Buy …More…. Next Gen Of Trucks….Future is Here….

[Krzysztof Kowalczyk]

$200 million is nothing. For reference, Rivian just disclosed that they've spent $2 billion+ in a single quarter Q1. And they are not making many cars yet.

Nikola burn rate in past quarters was $200million+ per quarter. And that was before they were making cars. The real expenses start when you have to buy car making equipment, car parts and hire people to assemble those cars.

This is not "investment" but a loan. Nikola will either have to repay it from cashflow (fat chance) or with shares i.e. by diluting existing shareholders. I can't quite tell from the language, but if they'll pay in shares, they'll be at a significant discount. Which implies Nikola can't just sell shares on the open market to raise money (without immediately tanking the share price) so the scammers that they are, they are disguising this as "investement" that will tank the stock price in the future.

Finally, 8-11% interest rate seems high to me. When Tesla issued convertible bonds (at a time everyone was telling us how they are going bankrupt soon), a five-year bond had 0.25% interest rate and seven-year bond was 1.25%.

8% for 4-year bond seems like desperation.

[Harm Hoeksema]

@Krzysztof Kowalczyk still i wonder why that hedge fund even gave them 200M.

If they would really ramp up electric trucks production I wouldn't be so negative on them. Instead of assembling EU made trucks.

[smer]

They bought debt and not equity. Not much of a vote of confidence in the company unfortunately

[123semi]

This makes the common stock basically worthless. This investor basically owns the company now.

[SD_Dude]

@123semi Explain?

[Jonathan Smart]

@SD_Dude It's called "lend to own". They're above the equity holders so in the event of a (likely) bankruptcy, they'll end up owning the company while equity holders get wiped out.

[SD_Dude]

@Jonathan Smart This is how most financing works, especially high risk. Year ago, I lost my capital in Charter Comm., which was a very stable company. Equity is always risky.

Earlier I posted a question if this company is a buy now. I would prefer to buy their convertible debt if possible. I believe in their approach, so I don't mind investing less than 1% of my assets as play money.

[SD_Dude]

Is it time to buy this stock?

[TrackAddict]

@SD_Dude No