© Reuters. Logo of U.S. truckmaker Nikola is pictured at the IAA Transportation fair, which will open its doors to the public on September 20, 2022, in Hanover, Germany, September 19, 2022. REUTERS/Fabian Bimmer
(Reuters) -Electric truck maker Nikola Corp said on Thursday it had garnered enough support for a proposal to increase the number of shares it can issue, opening the doors to much-needed capital.
The company had to adjourn its shareholder meeting twice because it lacked enough votes, even as it urged shareholders for months to vote in favor of so-called Proposal 2, saying its ability to continue as a going concern would be “out of reach” without the additional shares.
“This positive outcome, particularly with respect to Proposal 2, was critical for continued growth and success as we move forward with our strategic priorities,” CEO Michael Lohscheller said in a statement.
The company did not provide details of the voting.
Support for the proposal comes as Nikola, like many of its EV peers, has been struggling with a cash crunch, hampering production and forcing the company to cut costs.
To reduce cash burn, Nikola announced layoffs in June and liquidated assets of a recently acquired EV battery maker. It also decided to build battery electric trucks only to order and focus on hydrogen fuel cell trucks.
But investors have been closely scrutinizing cash reserves at Nikola and other electric-vehicle makers worried about more share disposals to raise funds diluting their stakes.
Opposing the vote vocally was Nikola’s founder and top shareholder Trevor Milton, who has also called for a change in leadership. Milton quit Nikola in 2020 following claims of fraud by a Wall Street short-seller. He was later convicted of fraud over allegations he lied to investors about Nikola’s technology.
Nikola is expected to show a 15% decline in revenue and widening losses when it reports second-quarter results on Friday.
Shares of Nikola, which have soared nearly 60% this year to Thursday’s close, fell 3.7% in after-hours trading.