Nikola (NKLA) Announces $40M Notes Offering
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Nikola (NASDAQ: NKLA) is offering $40,000,000 aggregate principal amount of our series A-2 senior convertible notes due 2024, or the Notes, at an offering price equal to $1,000 per $1,000 principal amount of notes. We are also offering by this prospectus supplement shares of our common stock issuable from time to time upon conversion or otherwise under the Notes (including shares that may be issued in payment of interest).
The Notes will bear interest at a rate of 5.0% per annum, payable in arrears on the first calendar day of each calendar quarter, beginning January 1, 2024, payable in shares of our common stock, cash or a combination of shares and cash, at our option. Upon the occurrence and during the continuance of an event of default, the interest rate on the Notes will increase to 12.5% per annum. Unless earlier converted or redeemed, the Notes will mature on September 22, 2024, subject to extension at the option of the holders in certain circumstances as provided in the Notes. All amounts due under the Notes are convertible at any time, in whole or in part, and subject to certain beneficial ownership limitations, at the option of the holders into shares of our common stock at a conversion price that is the lowest of (a) $2.94, which we refer to as the “reference price,” (b) the lower of the (i) reference price and (ii) the greater of $0.38, which we refer to herein as the “floor price,” and the volume weighted average price of our common stock as of the applicable conversion date, and (c) the greater of (i) the floor price and, as elected by the converting holder, (ii) either (X) depending on the delivery time of the applicable conversion notice, (I) the volume weighted average price of our common stock as of the applicable conversion date or (II) the volume weighted average price of our common stock immediately prior to the applicable conversion date, or (Y) 95% of the volume weighted average price of our common stock for the three trading days commencing on, and including, the applicable conversion date. The reference price and floor price are subject to customary adjustments upon any stock split, stock dividend, stock combination, recapitalization or similar event.
The Notes are being sold pursuant to a securities purchase agreement, or the Securities Purchase Agreement, among us and the investors in the Notes, dated as of August 21, 2023. On August 21, 2023, we sold $125,000,000 aggregate principal amount of our series A-1 senior convertible notes to the investors pursuant to the Securities Purchase Agreement. The Notes are being issued pursuant to the second supplemental indenture, or the Second Supplemental Indenture, dated as of September 22, 2023, between us and Wilmington Savings Fund Society, FSB, as trustee, or the Trustee. The Second Supplemental Indenture supplements the indenture entered into by and between us and the Trustee, dated as of August 21, 2023, or the Base Indenture. We collectively refer to the Base Indenture, together with the First Supplemental Indenture, dated as of August 21, 2023, or the First Supplemental Indenture, and the Second Supplemental Indenture, as the Indenture. The Indenture has been qualified under the Trust Indenture Act of 1939, and the terms of the Notes include those set forth in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act. Upon our filing of one or more additional prospectus supplements, and our satisfaction of certain other conditions, either we or an investor may elect to consummate additional closings of up to $160,000,000 in aggregate principal amount of senior convertible notes at additional closings, or the Additional Notes, pursuant to the Securities Purchase Agreement. However, we are not registering pursuant to this prospectus supplement the issuance of any such Additional Notes (or shares of common stock issuable upon conversion or otherwise of such Additional Notes) that may be issued, from time to time, at such additional closings under the Securities Purchase Agreement.
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