The EV maker announced the sale of up to $325 million in convertible bonds. The initial tranche will bring in roughly $125 million to company coffers.
The electric heavy-duty truck start-up Nikola is raising more money. That, plus a mention of the risks associated with a recent recall, is pushing down shares.
The bonds carry a coupon of 5% and interest can be paid in cash or common stock. The conversion price is based on a formula and ranges from 40 cents a share to $2.94 a share. Nikola didn’t immediately respond to a request for comment about the conversion math. Stock, bond, and convertible bond sales can push down shares of any company. In the case of stock and converts, sales represent more stock outstanding, which dilutes existing shareholders’ stakes. Sales of bonds can mean more interest payments, leaving less earnings and cash flow for common stockholders.
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