Nikola (NASDAQ:NKLA) fell more than 4% in pre-open trading Wednesday after it disclosed late Monday that its subsidiary Romeo Power transferred all of its assets to an entity controlled by creditors.
On June 30, 2023, Romeo Power, Inc. made a transfer of all its tangible and intangible assets to SG Service Co., LLC. This transfer was part of a general assignment where Romeo designated SG Service Co., LLC as the assignee to act on behalf of Romeo's creditors. As a result, SG Service Co., LLC became the new owner of Romeo's assets.
In this transfer, Romeo agreed to make certain payments to SG Service Co., LLC. These payments include a fee of $100,000, hourly service fees as agreed upon, and the reimbursement of reasonable fees and costs incurred by SG Service Co., LLC during the assignment process. Additionally, Romeo agreed to pay a fee equal to 1.00% of the proceeds generated from the sale or liquidation of the assets, excluding any proceeds from the parent company, Nikola Corporation.
Romeo Power was previously engaged in the manufacturing of battery modules, packs, and battery management systems for commercial vehicles. Nikola acquired Romeo power in 2022.