Fisker (NYSE:FSR) will hold its special meeting of stockholders on April 24 with three major proposals up for vote. Unfortunately, all three of the proposals will likely be viewed in a negative light by shareholders. On top of that, the electric vehicle (EV) company announced this morning that its negotiations with a large automaker have been terminated. FSR stock was down about 30% this morning before the New York Stock Exchange halted trading.
The first proposal seeks approval for the potential issuance of over 19.99% of outstanding FSR upon the conversion of senior secured convertible notes due in 2024. Last week, Fisker announced the sale of $166.67 million of these notes, resulting in gross proceeds of $150 million. These notes are convertible into FSR at any time, resulting in dilutive effects for shareholders.
However, Fisker noted this morning that a closing condition of the note sale would not be able to be satisfied due to its termination with the large automaker, which was rumored to be Nissan (OTCMKTS:NSANY).
“As a result of the inability to meet such closing condition, the Company intends to engage in discussions with the Investor regarding a waiver of such closing condition (or alternatively, having the Investor provide financing to the Company on different terms),” said Fisker.
FSR Stock: Fisker to Hold Special Meeting on April 24
Next, proposal two involves increasing authorized common stock to four billion from two billion. This proposal relates to the 2024 notes as well and will allow for a sufficient number of authorized shares upon the conversion of the notes. Fisker added that the shares could be used for anti-takeover purposes, although the proposal was not advanced with this intention.
Finally, proposal three seeks approval for a reverse stock split in a ratio between 1-for-10 and 1-for-50 at any time before Dec. 31, 2024. Fisker wants a reverse split in order to meet the NYSE’s minimum share price requirement for continued listing. The company also believes that a higher stock price will make it more attractive to lenders and investors.
The date of record for the meeting has been set to April 1. Shareholders of this date will be eligible to cast votes toward the meeting.
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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.
