General Motors seems to rethink whether to finalize its $2 billion deal with Nikola, which is currently plagued with fraud and sexual abuse allegations against its founder and former CEO Trevor Milton who recently stepped down from his post.
According to a public filing by Nikola after the announcement of the partnership, the deal may be terminated if it was not finalized by Dec. 3. However, sources say that executives from both firms are likely to continue their negotiations. Spokespersons of both companies refused to comment on the matter as there are still ongoing talks between parties.
The deal is supposed to be finalized before September 30, but fraud and sexual abuse allegations surfaced against Milton. It was initially viewed as a no-lose situation for the Detroit-based automaker, which will get an 11% share for supplying battery and fuel cell technologies for Nikola as well as manufacturing the start-up's Badger pickup.
Wall Street welcomed the deal, which GM CEO Mary Barra called as a "win-win." Milton also called the partnership with GM "made in heaven" and Nikola shares surge by up to 53% immediately after the announcement.
However, the party was soon halted by a report from short-seller Hindenburg Research, which characterized Nikola as an "intricate fraud built on dozens of lies" by the former CEO Milton who made false claims about the company's technology, which would invite investors and partnerships.
While Milton denied these claims, he resigned from his post on Sept. 21. Nikola's board of directors accepted his resignation immediately and appointed former GM vice chairman Stephen Girsky as chairman of the board.
The Department of Justice and Securities and Exchange Commission are reportedly investing in Milton's resignation and the fraud claims. Meanwhile, the CNBC has reported about two women who have filed sexual assault against Milton.
These cases involve Milton's cousin Aubrey Ferrin Smith who claimed she was assaulted in 1999 while an office assistant said she was assaulted in 2004. The respective occurred when Milton was 17 and 22.
Nikola Shares: Closed down to its lowest
Soon after Milton departed from the company, Nikola stocks dropped 26% on September 21 pre-market trades. The company's market performance continuously worsens as it closed down 7.4% to $17.88 on Tuesday, September 29.
It was the company's lowest record since Nikola went public on June 4 while shares are dropped by more than 60% since the deal was announced. Similarly, GM shares drop 2.4% to $28.74 as the market closed.
Milton alleged that Hindenburg would profit from the Nikola's poor stock performance, as Tech Times earlier reported. Hindenburg reported that Nikola's campaign video showing an electric truck driving up a hill was false as it was a reversed footage of the prototype moving downhill.
Hindenburg also accused Milton and Nikola as an "intricate fraud" while providing recorded phone conversations, text messages, emails, and legal documents to support its allegations.
Nikola's new CEO Girsky introduced Nikola to GM. Girsky has not released a comment yet on the matter.
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Written by CJ Robles
