Published: Mon, August 13, 2018
Money | By Armando Alvarado

Musk says he's talking with Saudi fund to take Tesla private

Musk says he's talking with Saudi fund to take Tesla private

Saudi Arabia is exploring how it could bankroll Elon Musk's ambitious plan to take Tesla private, as burnt short-sellers sue the electric vehicle entrepreneur over his bombshell tweet last week.

Musk also clarified that "most of the capital required for going private would be funded by equity rather than debt", which, he wrote, "reports that more than $70B would be needed to take Tesla private dramatically overstate the actual capital raise needed".

Mr. Musk provided greater detail of his efforts to take the company private in a blog posted on Tesla's website Monday.

In laying out why he is considering taking Tesla private, Musk pointed in part to shorts.

Musk's tweet announcing the deal - and a proclamation of "Funding secured" - shocked investors, and he has yet to back up his claim that he has financing for the transaction. The board held a meeting (without Musk or his brother Kimbal, who is also a board member), and Musk said he would reach out to some of Tesla's biggest investors to further discuss the issue. The Securities and Exchange Commission is investigating Musk's disclosure of the potential deal, according to reports earlier this week.

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"This is why I referred to "funding secured" in the August 7th announcement".

Shares of Tesla are now up 13% this year, but still below their $362 price at the time of Musk's first tweet about going private around 1 p.m. Tuesday. The country's Public Investment Fund, which has built up a stake of nearly 5 per cent in Tesla in recent months, is exploring how it can be involved in the potential deal, according to Bloomberg.

After meeting with the Saudi Public Investment Fund about their purchase of a 5% stake in Tesla, Musk said the delegation asked for another meeting, which took place on July 31. SoftBank said it won't be a part of the current group of investors that will try and take Tesla private as it has already invested in General Motors, increased competition facing the company, and due to Tesla not being able to deliver on its mass market ambition, Bloomberg reported. Tesla did not respond to a request for comment. It wasn't immediately clear how much the fund would invest in Tesla.

Musk and advisers are seeking a wide pool of investors to back a potential deal. Musk and SoftBank Group's Masayoshi Son held talks previous year that touched on taking Tesla private, two people with knowledge of the discussions have said.

The Saudi government is planning to turn the PIF into a US$2 trillion powerhouse to help diversify the kingdom's oil-dependent economy.

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