Published: Sun, August 12, 2018
Money | By Armando Alvarado

Who is funding Tesla buyout plan, board asks Elon Musk

Who is funding Tesla buyout plan, board asks Elon Musk

Tesla shares tumbled on Thursday (Aug 9) following a report the company faces intensifying scrutiny from securities regulators as United States stocks finished a quiet session mostly lower.

The SEC already has opened an inquiry into the wording and method of Musk's disclosure about the deal, according to a Wednesday report in The Wall Street Journal, which cited unidentified people familiar with the matter.

Musk had first raised the go-private possibility with the board last week, according to a statement from six of Tesla's nine directors.

It's unclear whether Saudi Arabia's sovereign wealth fund, which is said to have built less than a 5 per cent stake in Tesla, has agreed to commit money to the transaction, CNBC said.

In a statement on Wednesday, Tesla's board said its discussion with Mr Musk "addressed the funding" for the deal, without offering more details. 9, Tesla shares have dropped back to near the level they were trading at before CEO Elon Musk tweeted Tuesday that he may take the company private.

Telling Musk, Tesla's founder and largest shareholder, to go his own way is an unusual move for any board - and suggests that their interests are separate. I mean, if you are an institutional investor with hundreds of millions invested in Tesla, who, other than Musk, could you trust to speak authoritatively on behalf of the company?

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Elon Musk, a pioneer in commercial space exploration and electric cars, is now tinkering with one of Wall Street's most storied products: the management led buyout.

Some Wall Street analysts are skeptical about Musk's ability to garner enormous financial support to complete such an agreement, given Tesla's losses, its USA $ 10.9 billion in debt and its bonds rated in speculative territory by worldwide agencies. It is not clear if PIF is interested in financing Musk's proposed take-private deal.

News of the potential buyout already has stung investors known as "short sellers" who have always been a thorn in Musk's side.

I hope not, because I think Tesla going private is a great idea (like my friend Yann Brandt, who thankfully has announced in the wake of Musk's Twitter pronouncement that he is keeping his seminal solar newsletter, SolarWakeup, private). Tesla's stock backtracked by more than 2 percent to close at $370.34.

Booking Holdings slumped five per cent on disappointment over the company's third-quarter forecast.

According to UK's the Guardian, this new valuation would float his company from its current stock market value of $63.8 billion to a whopping $82 billion, a near $20 billion inflation. One was speculation about whether Musk was serious or just making a dumb weed joke (serious, it seems, based on this blog post on Tesla's website) and about how much cash he'd need to make it actually happen (likely $50 billion plus).

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