| 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.
