Item 1.01. Entry into a Material Definitive Agreement.
Private Placement of 8.00% / 11.00% Convertible Senior PIK Toggle Notes due 2026
On June 3, 2022, Nikola Corporation (the "Company") completed its previously
announced sale to funds managed or advised by Antara Capital LP (collectively,
the "Purchaser") of $200.0 million aggregate principal amount of the Company's
8.00% / 11.00% Convertible Senior PIK Toggle Notes due 2026 (the "Notes"). The
sale of $120.0 million aggregate principal amount of the Notes was completed on
June 1, 2022, with the sale of the remaining $80.0 million aggregate principal
amount completed on June 3, 2022. The Notes were sold pursuant to an investment
agreement (the "Investment Agreement"), dated as of April 30, 2022, entered into
by and among the Company, the Purchaser and Nikola Subsidiary Corporation, a
wholly owned subsidiary of the Company (the "Guarantor Subsidiary"). The Notes
are initially guaranteed by the Guarantor Subsidiary and will be guaranteed by
all future subsidiaries other than immaterial subsidiaries.
The gross proceeds from the sale of the Notes were approximately $200.0 million,
prior to deducting fees and estimated offering expenses. The purchase price for
the Notes sold on June 3, 2022 also included accrued and unpaid interest from
June 1, 2022.
Subject to certain limitations, the Investment Agreement provides the Purchaser
with certain registration rights for the shares of the Company's common stock
issuable upon conversion of the Notes. The Investment Agreement requires the
Company to prepare and file a registration statement with the U.S. Securities
and Exchange Commission (the "SEC") as soon as reasonably practicable after the
issuance of the Notes to register the resale of the shares underlying the Notes.
In addition, the Company is also required to prepare, file and have declared
effective a registration statement with the SEC to register the resale of shares
underlying potential capitalized PIK Interest (as defined below) as a condition
of the Company's election to pay PIK Interest.
Indenture and Issuance of Convertible Notes
The Notes were issued pursuant to an indenture, dated as of June 1, 2022 (the
"Indenture"), by and among the Company, the Guarantor Subsidiary, as guarantor,
and U.S. Bank Trust Company, National Association, as trustee. The Notes are
senior, unsecured obligations of the Company and any guarantor, bearing interest
at a rate of 8.00% per annum, to the extent paid in cash ("Cash Interest"), and
11.00% per annum, to the extent paid in kind through an increase in the
principal amount of the Notes ("PIK Interest"). The Company can elect to make
any interest payment through Cash Interest, PIK Interest or any combination
thereof. Any PIK Interest will be paid by increasing the principal amount of the
affected Notes at the end of the applicable interest period by the amount of
such PIK Interest (rounded up to the nearest dollar). Following an increase in
the principal amount of any Notes as a result of a PIK Interest payment, such
Notes will bear interest on the increased principal amount from and after the
date of such PIK Interest payment. Interest on the Notes is payable
semi-annually in arrears on May 31 and November 30, commencing on November 30,
2022. The Notes will mature on May 31, 2026, unless redeemed, repurchased or
converted in accordance with their terms prior to such date.
The Notes are convertible at an initial conversion rate of 114.3602 shares of
the Company's common stock, $0.0001 par value per share ("Common Stock"), per
$1,000 principal amount of Notes (which is equivalent to an initial conversion
price of approximately $8.74 per share of Common Stock, which represents 130% of
the average daily per share volume-weighted average price of the Common Stock
over the seven consecutive trading days starting May 2, 2022 and ending May 10,
2022). Prior to the close of business on the business day immediately preceding
February 28, 2026, such conversion will be subject to the satisfaction of
certain conditions set forth below. On or after February 28, 2026, holders of
the Notes will have the right to convert all or a portion of their Notes at any
time prior to close of business on the second scheduled trading day immediately
preceding the maturity date. Upon conversion, holders of the Notes will receive
cash, shares of Common Stock or a combination of cash and shares of Common
Stock, at the Company's election.
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Holders of the Notes will have the right to convert all or a portion of their
Notes prior to the close of business on the business day immediately preceding
February 28, 2026 only under the following circumstances: (i) during any fiscal
quarter commencing after the fiscal quarter ending on September 30, 2022 (and
only during such fiscal quarter), if the last reported sale price of the Common
Stock for at least 20 trading days (whether or not consecutive) during a period
of 30 consecutive trading days ending on, and including, the last trading day of
the immediately preceding fiscal quarter is greater than or equal to 130% of the
conversion price for the Notes on each applicable trading day; (ii) during the
five business day period after any ten consecutive trading day period in which
the trading price per $1,000 principal amount of the Notes for each trading day
of that ten consecutive trading day period was less than 98% of the product of
the last reported sale price of the Common Stock and the conversion rate of the
Notes on each such trading day; (iii) if the Company calls such Notes for
redemption, at any time prior to the close of business on the second business
day immediately preceding the redemption date; or (iv) upon the occurrence of
specified corporate events.
The Company may not redeem the Notes prior to the third anniversary of the date
of initial issuance of the Notes. The Company may redeem the Notes in whole or
in part, at its option, on or after such date and prior to the 26th scheduled
trading day immediately preceding the maturity date, for a cash purchase price
equal to the aggregate principal amount of any Notes to be redeemed plus accrued
and unpaid interest thereon.
In addition, following certain corporate events that occur prior to the maturity
date or following issuance by the Company of a notice of redemption, in each
case as provided in the Indenture, in certain circumstances, the Company will
increase the conversion rate for a holder who elects to convert its Notes in
connection with such a corporate event or who elects to convert any Notes called
for redemption during the related redemption period. Additionally, in the event
of a fundamental change or a change in control transaction (each such term as
defined in the Indenture), holders of the Notes will have the right to require
the Company to repurchase all or a portion of their Notes at a price equal to
100% of the capitalized principal amount of Notes, in the case of a fundamental
change, or 130% of the capitalized principal amount of Notes, in the case of
change in control transactions, in each case plus any accrued and unpaid
interest to, but excluding, the repurchase date.
The Indenture includes restrictive covenants that, subject to specified
exceptions, limit the ability of the Company and its subsidiaries to incur
secured debt in excess of $500.0 million, incur other subsidiary guarantees, and
sell equity interests of any subsidiary that guarantees the Notes. In addition,
the Indenture includes customary terms and covenants, including certain events
of default after which the holders may accelerate the maturity of the Notes and
become due and payable immediately. Such events of default include: (i) certain
payment defaults on the Notes (which, in the case of a default in the payment of
interest on the Notes, will be subject to a 30-day cure period); (ii) the
Company's failure to send certain notices under the Indenture within specified
periods of time, if such failure is not cured within five business days;
(iii) the Company's failure to comply with certain covenants in the Indenture
relating to the Company's ability to consolidate with or merge with or into, or
sell, lease or otherwise transfer, in one transaction or a series of
transactions, all or substantially all of the assets of the Company and its
subsidiaries, taken as a whole, to another person; (iv) the Company's failure in
its obligation to convert a Note, if such default is not cured within five
business days; (v) a default by the Company or any guarantor in their other
obligations or agreements under the Indenture or the Notes if such default is
not cured or waived within 60 days after notice is given in accordance with the
Indenture; (vi) certain defaults by the Company, any "significant subsidiary" of
the Company (within the meaning of Regulation S-X), or any guarantor with
respect to indebtedness for borrowed money of at least $30,000,000; (vii)
certain failures by the Company, any significant subsidiary of the Company or
any guarantor with respect to the payment of final judgments of at least
$30,000,000; (viii) certain events of bankruptcy, insolvency and reorganization
involving the Company, any significant subsidiary of the Company or any
guarantor; and (ix) except as permitted under the Indenture, the guarantee (as
defined in the Indenture) of any guarantor ceases to be in full force and
effect, or such guarantor denies or disaffirms in writing its obligations under
the Indenture of its guarantee.
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The foregoing summaries of the Indenture, the Notes and the Investment Agreement
. . .
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of the Registrant
The information set forth in Item 1.01 of this Current Report on Form 8-K is
incorporated herein by reference.
Item 3.02 Unregistered Sale of Securities
The Notes were sold to the Purchaser in a private placement in reliance on the
exemption from the registration requirements of the Securities Act of 1933 (the
"Securities Act") provided by Section 4(a)(2) of the Securities Act. The Company
relied on this exemption from registration based in part on representations made
by the Purchaser in the Investment Agreement.
The information related to the issuance of the Notes contained in Item 1.01 of
this Current Report on Form 8-K is incorporated by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
Number Description
4.1 Indenture (including form of Note), dated June 1, 2022, by and among
Nikola Corporation, Nikola Subsidiary Corporation and U.S. Bank Trust
Company, National Association.
10.1 Investment Agreement, dated April 30, 2022, by and among Nikola
Corporation, Nikola Subsidiary Corporation and Antara Capital LP.
104 Cover Page Interactive Data File (formatted as Inline XBRL).
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