What has been sent out to investors? Why are investors being communicated to now?
A proxy statement was sent to VectoIQ Acquisition Corp. stockholders, and was filed with the U.S. Securities and Exchange Commission on April 20, 2020, requesting an extension of the termination date of our SPAC to July 31, 2020, which was formed two years ago and set to expire on May 18, 2020.
We are asking stockholders to allow us more time to close the business combination with Nikola. The special meeting of stockholders is scheduled to take place on May 12, 2020, at 11 a.m. ET., or at a later date, if necessary. VectoIQ is a special purpose acquisition company formed for the purpose of acquiring a business in the automotive technology space.
Why is the redemption share price lower than where the stock is trading?
A SPAC is formed to find a company to identify and consummate a business combination. When the SPAC is formed, it is not yet known which company will be proposed for a merger, so SPAC investors are typically given a redemption right (at the original purchase price of the SPAC, plus interest earned). This provides the original investors with the chance to review the business combination when it is proposed to decide if they want to remain as an investor. VectoIQ’s shareholders will have such a redemption right in connection with the proposed business combination with Nikola. In addition, VectoIQ’s stockholders have the same right of redemption now, in connection with the vote to extend VectoIQ’s expiration date to July 31.
As the proxy statement dated April 20 stated, VectoIQ estimates that the per-share pro rata portion of the trust account will be approximately $10.36 at the time of the special meeting, based on the approximate amount of $238.4 million held in the trust account as of March 31, 2020. This is lower than VectoIQ’s common stock closing price of $11.74 on April 17, 2020, the last trading day before the letter was filed with the SEC. Accordingly, if the market price were to remain the same until the date of the special meeting, exercising redemption rights would result in a public stockholder receiving $1.38 less for each share than if such stockholder sold the shares in the open market. If you exercise your redemption rights, you will be exchanging your shares of common stock for cash and will no longer own the shares.
We are required to offer the redemption right to all stockholders in connection with our proposed vote to extend the SPAC. This is why you have received the proxy to vote for the extension as well as why you have been informed of your redemption right.
What happens next?
We expect that there will be a second proxy statement sent to you shortly. It will seek your approval for the business combination.
What will I be asked to do, and why?
If the extension is approved at the upcoming meeting, you will be asked to vote for the proposed business combination between VectoIQ and Nikola so that it can close. If approved, this is the final step to complete the transaction. At the closing of the business combination, the VTIQ ticker symbol will change to NKLA and each outstanding share of VTIQ will continue to be one share of the combined company. It is anticipated that NKLA shares will continue to be listed on the NASDAQ.
In connection with the vote on the business combination, all VectoIQ stockholders will again be offered redemption rights. Again, this was put in place as a protection right for the public investors in the SPAC. If you desire to retain your shares in VectoIQ and become a stockholder in Nikola, you do not need to take any action regarding this redemption right.