PROPOSED BUSINESS COMBINATION: Nikola Motors
ESTIMATED CURRENT FUNDS in TRUST: $238.8 million*
CURRENT PER SHARE REDEMPTION PRICE: $10.39*
ENTERPRISE VALUE: $3.3 billion
*SPACInsider estimate a/o 6-1-20
VectoIQ Acquisition Corp. proposes to combine with Nikola Motors, a company focused on the development of next generation smart transportation. Upon the closing of the transaction, the combined company will be named Nikola Corporation and is expected to remain NASDAQ-listed under the new ticker symbol “NKLA.”
Nikola is a global leader in zero emissions heavy duty trucks and hydrogen infrastructure. More than $10 billion in pre-order leases to date and the joint venture with European industrial vehicle manufacturer IVECO make Nikola a formidable competitor to other OEMs (original equipment manufacturers). Nikola’s business model uniquely supplies both the truck and hydrogen fueling infrastructure, solving the fleets’ concerns of where to refuel with green hydrogen at competitive pricing to diesel. The transaction proceeds will accelerate production, allow Nikola to break ground on its state-of-the-art manufacturing facility in Coolidge, Arizona, and begin its hydrogen station infrastructure roll out. The company expects to generate revenue by 2021 with the roll out of its BEV truck, followed by FCEV truck sales starting in 2023 and the initial build out of hydrogen fueling stations to serve Nikola customers’ fleets, such as Anheuser-Busch.
Trevor Milton, Founder and CEO of Nikola, will serve as Executive Chairman of the combined company. Prior to launching Nikola in 2015, Mr. Milton served as CEO of dHybrid Systems, a natural gas storage technology company. Additionally, Mark Russell, who has more than 20 years of experience building and managing companies in the manufacturing industry, will serve as the CEO of Nikola. He joined Nikola as President in 2019 and previously served as President and COO of Worthington Industries, a publicly-listed metals manufacturing company.
Kim Brady, currently the CFO at Nikola, will continue in that role post-close. Mr. Brady has more than 20 years of experience in private equity and investment banking. Prior to joining Nikola, Mr. Brady served as Senior Managing Director at Solic Capital, as well as CFO and General Manager at various companies in the manufacturing, business services and healthcare sectors.
The transaction reflects an implied enterprise value at closing of $3.3 billion. Cash proceeds raised in connection with the transaction, which will primarily be used to fund operations, support growth and for other general corporate purposes, will be funded through a combination of VectoIQ’s cash in trust and a $525 million private placement of common stock at $10.00 per share led by institutional investors including Fidelity Management & Research Company, ValueAct Spring Fund and P. Schoenfeld Asset Management LP. Current Nikola stockholders will remain majority owners of the combined company at closing.
The transaction is structured as a reverse triangular merger, which includes the following:
- On the Closing Date, Merger Sub, a newly formed, wholly-owned direct subsidiary of VectoIQ, will be merged with and into the Company, with the Company surviving the Merger as a wholly-owned direct subsidiary of VectoIQ;
- Certain investors have entered into certain subscription agreements, pursuant to which such investors will purchase shares of VectoIQ Common Stock at a purchase price of $10.00 per share in a private placement to be consummated immediately prior to the consummation of the Proposed Transactions;
- In addition, concurrently with the execution of the Business Combination Agreement, VectoIQ, the Company and the Key Company Stockholders entered into a Stockholder Support Agreement, pursuant to which such Key Company Stockholders agreed to vote their shares of Company Common Stock and Company Preferred Stock in favor of the Business Combination Agreement and the Proposed Transactions; and
- In connection with the Closing, VectoIQ, certain stockholders of the Company and certain stockholders of VectoIQ will also enter into a registration rights and lock-up agreement.
- VectoIQ entered into separate subscription agreements for an aggregate of 52,500,000 shares of VectoIQ Common Stock (the “PIPE Shares”), for a purchase price of $10.00 per share and an aggregate purchase price of $525 million.
- Anchored by institutional investors including Fidelity Management & Research Company, ValueAct Spring Fund and P. Schoenfeld Asset Management LP
NOTABLE CONDITIONS TO CLOSING
- The Company has at least $60 million in cash
- The Company has indebtedness for borrowed money of no more than $4.1 million.
NOTABLE CONDITIONS TO TERMINATION
- The combination must be consummated on or before May 18, 2020 (the “First Expiration Date”).
- If VectoIQ needs to extend their deadline, August 31, 2020 is the “Outside Date”.
- The Company (Nikola) will pay a termination fee in the amount of $82 million (the “Termination Fee”), in the event that:
- The Business Combination Agreement is terminated
- by the Company or VectoIQ, if the Effective Time did not occur prior to the Outside Date,
- by VectoIQ, if the Company failed to deliver the Written Consent to VectoIQ within twenty-four hours after the Registration Statement becomes effective or
- pursuant to a Terminating Company Breach;
- A bona fide Company Acquisition Proposal has been made, proposed or otherwise communicated to the Company after the date of the Business Combination Agreement; and
- within six months of the date the Business Combination Agreement is terminated, the Company enters into a definitive agreement with respect to such Company Acquisition Proposal
- The Business Combination Agreement is terminated
SPONSOR SHARES AND PRIVATE PLACEMENT PURCHASE
- 5,750,000 founder shares at IPO; none to be forfeited and cancelled
- 890,000 private placement units at IPO; none to be forfeited and cancelled
The securities held by the Original Holders will be locked-up for one year following the Closing, subject to earlier release if:
- The reported last sale price of VectoIQ’s common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Closing or
- If VectoIQ consummates a liquidation, merger, stock exchange or other similar transaction after the Closing which results in all of VectoIQ’s stockholders having the right to exchange their shares of common stock for cash, securities or other property.
- The securities held by the New Holders, other than certain entities controlled by Trevor Milton, will be locked-up for 180 days after the Closing.
- The securities held by certain entities controlled by Trevor Milton will be locked up for one year following the Closing, except that they would be permitted to sell or otherwise transfer an aggregate of $70.0 million shares of VectoIQ Common Stock commencing 180 days after the Closing.
- The company will add Stephen Girsky, current CEO of VectoIQ and former Vice Chairman of General Motors Corporation, to its Board of Directors
- Trevor Milton, Founder and CEO of Nikola, will serve as Executive Chairman of the combined company
- Mark Russell, will serve as the CEO of Nikola. He joined Nikola as President in 2019.
- Kim Brady, currently the CFO at Nikola, will continue in that role post-close.
- Cowen served as sole financial advisor and lead capital markets advisor.
- Greenberg Traurig, LLP served as legal advisor to VectoIQ.
- Deutsche Bank Securities Inc. served as an additional capital markets advisor to VectoIQ.
- Morgan Stanley served as financial advisor.
- Pillsbury Winthrop Shaw Pittman LLP served as legal advisor to Nikola.
VECTOIQ MANAGEMENT & BOARD
Stephen Girsky, 55
President, CEO and Director
Mr. Girsky is a Managing Partner of VectoIQ, LLC, an independent advisory firm based in New York. Mr. Girsky has more than 30 years of experience working with corporate board executives, labor leaders, OEM leaders, suppliers, dealers and national policy makers. Mr. Girsky served in a number of capacities at General Motors from November 2009 until July 2014, including Vice Chairman, having responsibility for global corporate strategy, new business development, global product planning and program management, global connected consumer/OnStar, and GM Ventures LLC, Global Research & Development and Global Purchasing and Supply Chain. Mr. Girsky served as Chairman of the Adam Opel AG Supervisory Board from November 2011 to January 2014 and was President of GM Europe from July 2012 to March 2013. He also served on General Motors’ Board of Directors following its emergence from bankruptcy in June 2009 until June 2016. Mr. Girsky has also served as president of Centerbridge Industrial Partners, an affiliate of Centerbridge Partners, LP and a multibillion dollar investment fund, from 2006 to 2009. Prior to Centerbridge, Mr. Girsky served as Special Advisor to the Chief Executive Officer and Chief Financial Officer of General Motors from 2005 to 2006, and prior to that Mr. Girsky served as managing director at Morgan Stanley and as senior analyst of the Morgan Stanley Global Automotive and Auto Parts Research Team. Mr. Girsky currently serves on the Boards of Directors of United States Steel Corporation and Brookfield Business Partners Limited, the general partner of Brookfield Business Partners, L.P. (NYSE: BBU; TSX BBU.UN), as well as three private companies, drive.ai, Valens Semiconductor and Millstein & Co.
Mary Chan, 55
Chief Operating Officer
Ms. Chan is a Managing Partner of VectoIQ, LLC. Ms. Chan served as President, Global Connected Consumer of General Motors from May 2012 to May 2015. In that role, she was responsible for building the next generation of connected vehicle product and services. Prior to General Motors, she worked at Dell Inc., where she was Senior Vice President and General Manager of Enterprise Mobility Solutions & Services from 2009 to 2012. At Dell, Ms. Chan was responsible for developing Consumer PC/Gaming products and Enterprise Mobility Application services. Prior to Dell, with over 20 years of wireless infrastructure experience she was the EVP/President Global Wireless Network Group at Alcatel-Lucent and SVP of Wireless R&D at Lucent Technologies Inc. Ms. Chan currently serves on the Boards of Directors of Magna International Inc. (NYSE: MGA), Dialog Semiconductor PLC (ETR: DLG), SBA Communications Corporation (Nasdaq: SBAC) and Microelectronics Technology Inc. (TPE: 2314), as well as two private companies, WiTricity Corporation and Service King.
Steve Shindler, 55
Mr. Shindler is a Director of NII Holdings, Inc., a provider of differentiated mobile communications services for businesses and high value consumers in Latin America. Mr. Shindler served as Chief Executive Officer of NII from 2012 until August of 2017 as well as from 2000 to 2008. As Chief Executive Officer, Mr. Shindler successfully transformed NII from a start-up operation into a leading wireless provider with nearly 11.5 million subscribers. In his most recent role as Chief Executive Officer of NII, Mr. Shindler guided the company through a financial restructuring that included sales of its core businesses in Mexico, Peru, Argentina and Chile, as well as a voluntary petition seeking relief under Chapter 11 of the U.S. Bankruptcy Code in September 2014, where he continued in the Chief Executive Officer role following its emergence from bankruptcy in June 2015. Mr. Shindler joined Nextel Communications, Inc. in 1996 as Executive Vice President and Chief Financial Officer. Prior to joining Nextel, Mr. Shindler was Managing Director of Communications Finance at The Toronto Dominion Bank, one of the largest suppliers of capital to the wireless industry. Mr. Shindler is also a founding partner of RIME Communications Capital, a firm that has invested in early stage media, tech and telco companies.
Mindy Luxenberg-Grant, 50
Ms. Luxenberg-Grant is the Chief Financial Officer of VectoIQ LLC. Prior to joining VectoIQ LLC, Ms. Luxenberg-Grant was a Founder and has served as Chief Financial Officer of Headhaul Capital Partners LLC since April 2013. Ms. Luxenberg-Grant was also the Chief Financial Officer of Jefferies Capital Partners LLC and its predecessors from 1997 to 2009. She was a Manager with PricewaterhouseCoopers where she specialized in business assurances and tax services as part of its Entrepreneurial Advisory Services group and serviced exclusively venture capital and private investment fund clients. Ms. Luxenberg-Grant also spent two years as the Chief Financial Officer of Western NIS Enterprise Fund, a venture capital fund which invested in small and medium-sized companies based primarily in the Ukraine.
Board of Directors
Robert Gendelman, 59
Mr. Gendelman has served as Senior Portfolio Manager and head of Equity Investments at Loews Corporation, a diversified holding company, since January 2013. Prior to joining Loews Corporation, Mr. Gendelman was Chief Investment Officer for RG Advisors, and prior to that was Managing Director at Clearbridge Advisors, where he managed assets for Legg Mason Partners Capital & Income Fund. He also spent approximately 10 years as a portfolio manager at Neuberger Berman.
Sarah W. Hallac, 53
Ms. Hallac has served as a consultant for a corporate philanthropic initiative by BlackRock, Inc., an investment management corporation. Ms. Hallac is a retired investment banker from Bear, Stearns and Company, where she spent her entire career in the Financial Analytics and Structured Transactions group. Ms. Hallac was involved in the early days of mortgage securitization including the first Agency Real Estate Mortgage Investment Conduit (REMIC) issued by the Federal National Mortgage Association (FNMA). Ms. Hallac has been published in several books, including The Handbook of Mortgage-Backed Securities.
Richard J. Lynch, 69
Mr. Lynch has served as President of FB Associates, LLC, a consulting firm that specializes in the telecommunications industry, since October 2011. Prior to that, Mr. Lynch held the positions of Executive Vice President and Chief Technology Officer with Verizon Communications and with Verizon Wireless and its predecessors. Mr. Lynch currently serves as Chairman of the Board of Ribbon Communications Inc. (Nasdaq: RBBN) and a director of Blackberry Limited (NYSE: BB).
Victoria McInnis, 56
Ms. McInnis held various positions with General Motors Corporation prior to her retirement in August 2017, including Vice President, Tax and Audit March 2015 to August 2017, Chief Tax Officer from 2009 to March 2015 and, prior to that, Executive Director, Tax Counsel, General Tax Director, Europe, Director of Federal Tax Audits, and Senior Tax Counsel, GM Canada.