Kiss of Death: Soros Buys Tesla Debt

Kiss of Death: Soros Buys Tesla Debt

Kiss of Death: Soros Buys Tesla Debt


Billionaire investor George Soros has invested in electric car maker Tesla at a time when the company is facing stock sell-off amid severe production and legal problems.

Soros Fund Management invested $35 million in the convertible bonds of Tesla, which are due in March 2019, Reuters reports quoting the US Securities and Exchange Commission.

This is not the first collusion between Soros and Tesla CEO Elon Musk, and last time it ended badly. In 2016, Soros helped Musk raise $305 million on SolarCity Corp, a debt-laden solar panel firm backed by Musk and that was sucked up in to Tesla to avoid collapse.

Tesla Inc. is burning cash and faces repayment on $3.7 billion of debt by the end of 2020, much of it convertible bonds including the rubbish it inherited from SolarCity Corp.

Tesla’s debt carries a high conversion price and while the shares traded well above that last year the likelihood of conversion has almost vanished with the stock trading at $266.62,and that raises an ugly possibility for Tesla, maybe it will have to pay the debt in cash, cash the car maker does not have.

Things are not improving

Tesla has faced many troubles in the last few weeks. Investors are concerned about the company’s ability to produce its cheaper Model 3 sedan. A crash which involved Tesla’s autopilot added concerns about the firm. On Wednesday, Tesla was trading at $283.87 per share, continuing to lose the temporary rebound it saw last week.

Earlier this week, Musk said the firm undergoing a “thorough reorganization.” In the last year alone, Tesla lost over $2 billion. The company was losing $6,500 every minute and needs another $2 billion to get through the current year, according Bloomberg estimates. The problems continued this year after the company lost almost $710 million in the first quarter of 2018.

The following two tabs change content below.
S. Jack Heffernan Ph.D. Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

Latest posts by S. Jack Heffernan Ph.D (see all)