extends talks

GM extends talks on $2 billion deal with Nikola after fraud, sexual assault allegations surface against Trevor Milton – CNBC

Nikola Motor Company Badger pickup truck

Source: Nikola Motor Company

General Motors and Nikola are not expected to finalize a $2 billion deal scheduled to close before Wednesday after allegations of fraud and sexual abuse surfaced against the embattled start-up’s founder and former executive chairman, Trevor Milton, according to two people familiar with the negotiations.

Executives at both companies are expected to extend the talks, the people said, asking not to be identified because the negotiations aren’t public. 

The deal was initially viewed as a no-lose situation for GM. The partnership would give the Detroit automaker an 11% stake in the company for supplying Nikola battery and fuel cell technologies as well as producing Nikola’s Badger pickup.

Shares of Nikola closed Tuesday down 7.4% to $17.88 – the stock’s lowest closing since the company went public on June 4. Nikola’s shares rose by more than 5% in after-hours trading. GM shares closed down 2.4% to $28.74.

Spokespeople with both companies declined to comment on the talks, citing ongoing negotiations.

The deal was hailed by Wall Street and sent shares of Nikola up as much as 53% on the day of the announcement, which Milton called a “‘partnership made in heaven.” GM CEO Mary Barra described it as a “win-win.” But the celebration quickly soured.

Two days after the announcement, short seller Hindenburg Research released a damning report accusing Milton of making false statements about the company’s technology to attract investors and partnerships with other automakers. It characterized Nikola as an “intricate fraud built on dozens of lies” by Milton, who dismissed many of the claims before resigning on Sept. 21.

Milton’s resignation combined with the fraud claims, which have reportedly sparked inquiries by the Securities and Exchange Commission and Department of Justice, cratered Nikola shares. Since the deal was announced, shares are down more than 60% – making the company much less attractive to GM.

The most recent blow to the Nikola-GM deal is continuing to play out. Two women, as first reported by CNBC, have now filed sexual assault claims with Utah authorities against Milton. Both allegations were more than 15 years old but involve a cousin and an office assistant when both were 15 years old. Milton’s cousin Aubrey Ferrin Smith said he assaulted her in 1999 when he was 17 while the other woman says her alleged assault took place in 2004 when he was 22. CNBC doesn’t identify the victims of sexual assault unless the victim chooses to publicly release their name.

The deal may be terminated by either side if it’s not closed by Dec. 3, according to a public filing by Nikola when the partnership was announced.

The fraud and sexual assault claims have raised major concerns about the due diligence GM and others involved performed on Nikola. 

GM declined to say whether the company was aware of any allegations of fraud or sexual abuse regarding Milton. GM CEO Mary Barra earlier this month defended the company’s partnership with Nikola, saying it conducted “appropriate diligence” before announcing the agreement.

GM was introduced to Nikola through Steve Girsky, the former vice chairman of GM who succeeded Milton as executive chairman at Nikola earlier this month. Girsky is a managing partner at VectoIQ, the special purpose acquisition company that took Nikola public. He joined Nikola’s board after the deal closed.

Regarding Nikola, Girsky previously said his company “showed up with an army of people to diligence this thing,” according to a webcast with an industry show, Autoline, in early August.

“We really crawled all over these guys. It wasn’t pleasant at times,” he said, adding he didn’t “doubt there are going to be twists and turns here, but I did put my reputation on the line for this thing.”

Girsky did not return calls or texts for comment. VectoIQ did not return emails. Bosch, an auto supplier partner of Nikola since 2017, declined to comment on its due diligence process regarding Nikola.

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extends Japan

Japan extends state of emergency as coronavirus keeps spreading – CBS News

Tokyo — Japan’s prime minister on Monday extended a state of emergency over the coronavirus until the end of May, as the government warned it was too soon to lift restrictions.

“I will extend the period of the state of emergency I declared on April 7 until May 31. The area covered is all prefectures in the nation,” Shinzo Abe said after a meeting to discuss the measures.

Abe declared a month-long state of emergency that initially covered Tokyo and six other regions on April 7, later expanding it to cover the entire country.

It had been due to expire on Wednesday, but the country’s minister for the virus response Yasutoshi Nishimura said earlier that new infections were still growing.

“The number of new cases has declined, but unfortunately the decrease has not reached the targeted level,” he said during a meeting with an expert panel advising the government on the pandemic.

“As the healthcare sector remains under pressure, we need continued cooperation from people.”

Japan’s virus outbreak remains comparatively small compared to those seen in parts of Europe and the United States, with over 15,000 infections recorded and 510 deaths.

But the extension was backed by both experts advising the government and regional governors, with concerns that a sudden spike in cases that would overwhelm healthcare systems remains possible.

Japan’s COVID-19 response

The state of emergency falls far short of the harshest measures seen in parts of Europe and the United States. It allows local governors to urge people to stay at home and call on businesses to stay shut.

But officials cannot compel citizens to comply, and there are no punishments for those who fail to do so.

The government is expected to urge residents in 13 high-risk prefectures, including Japan’s biggest cities, to continue cutting person-to-person contact by 80 percent and exercise other strict social distancing measures.

But museums, libraries and some other facilities are likely to be allowed to reopen so long as they take anti-virus measures.

New coronavirus infections in Asia spur fears of resurgence

For the rest of Japan, prefectures will be allowed to loosen restrictions on business closures and small gatherings but residents will still be asked not to travel outside their home regions. Bars and nightclubs will be asked to remain shut.

It remains unclear when and whether schools, many of which have been closed since March, will be able to reopen, with officials recently suggesting a possible phased reopening with certain key grades resuming before others.

Abe said experts would review the situation around May 14, and the measures could be lifted at that time depending on the situation in a given region.

Hospitals feeling the strain

Despite so far avoiding the devastating tolls seen in places like Italy and New York, there have been persistent fears that Japan’s healthcare system could be quickly overwhelmed by a sudden spike in infections.

There are just five ICU beds per 100,000 people in Japan, less than half the number in Italy, and doctors’ associations have warned that hospitals are already stretched thin.

Measures have been implemented to try to ease the pressure, including sending coronavirus patients with mild symptoms to hotels for quarantine rather than keeping them in overcrowded hospitals.

The government has also said it is increasing testing capacity but continues to face criticism for the relatively low numbers of tests being carried out, in part because of stringent criteria.

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