Nikola (NASDAQ:NKLA) and its founder, former CEO and chairman Trevor Milton are in the spotlight following a social media scramble. Yesterday, Milton broke his social media silence with an Instagram post that detailed his stance on the proposals for Nikola’s upcoming annual meeting of stockholders, which has been adjourned to July 5.
Per Milton’s Instagram post:
“I voted about 50,000,000 shares NO on all proposals at Nikola, including WITHHOLD ALL on all directors. The company does not need new shares, they need new leadership […] The market has spoken since I blocked the extreme dilution proposal. Nikola now has a chance to avoid being delisted or suffer a reverse split thanks to my vote and all those who voted NO.”
NKLA Stock: Nikola Alleges Trevor Milton of Violating Agreement
Following Milton’s post, Nikola released a filing that accuses Milton of directly violating agreements made in September 2020. The company stated that Milton agreed to vote in favor of directors nominated by the board and “not to solicit others to vote against any director or other proposal.”
“The social media post made by Mr. Milton on June 15 misstates the facts. Mr. Milton is not able to ‘block’ any proposal with his votes and did not ‘block’ the passage of Proposal 2. Even with his opposing votes on all proposals, five out of the six proposals have received the necessary votes for approval, which demonstrates stockholder confidence in Nikola and its leadership,” said Nikola.
Proposal 2 seeks approval to increase the number of authorized common stock to 1.6 billion from 800 million. Proposal 4 is also dilutive to NKLA stock in favor of management. It seeks to increase common stock available for issuance to 50 million from 20 million.
Nikola also explained that five of the six proposals have already received shareholder approval. The company elaborated that the meeting was adjourned in order to receive the necessary votes for Proposal 2. Nikola also added that Proposal 2 could pass even without Milton’s votes.
The argument here is pretty clear. Milton opposes dilution, while Nikola is in favor of it to use the proceeds toward business objectives. Now, it’s up to Nikola’s shareholders to decide.
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On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
