Tesla (NASDAQ:TSLA) CEO Musk Struggling for Clarity in ‘420’ Surprise
Tesla Inc. (NASDAQ:TSLA)Chief Executive Elon Musk said Monday a 31 July meeting with Saudi Arabia’s sovereign wealth fund convinced him he could secure funding to take the EV-maker private, but that he was still talking to the fund and other investors as he seeks to nail down financing.
Mr. Musk’s latest disclosure comes 6 days after he surprised investors by announcing on Twitter that he was considering taking Tesla private at a price of 420/share and that funding was “secured.”
Since then, no investors have stepped forward publicly as being involved with the plan, and Mr. Musk’s Tweet is under investigation by the US Securities and Exchange Commission, and the subject of lawsuits brought against him by investors.
The company declined to comment beyond the blog post.
Monday, Mr.Musk said he is talking to other potential investors but did not provide any details on the exact source of financing. He also said he is still trying to gauge how many existing shareholders would keep their stake in a new private company, which would determine how much funding is needed.
Saudi Arabia’s Public Investment Fund (PIF) manages more than $230-B in assets, but about 65% of that is stakes in large Saudi companies and most of the rest has been committed in overseas deals such as funding commitments to Blackstone Group’s (NYSE:BX) U.S. infrastructure fund or SoftBank Group Corp.’s Vision Fund.
The Saudi fund intends to sell its $70 billion stake in Saudi Basic Industries to oil giant Aramco, which could free up funds for new deals, but that sale may take months to conclude.
Yasir Othman al-Rumayyan, managing director of the PIF, referred Reuters to the corporate communications team, which did not immediately respond to a request for comment.
The PIF board is headed by the Crown Prince Mohammed bin Salman.
Mr. Musk faces scrutiny of his Tweet on secured funding.
Securities lawyers said US law requires executives and companies to have a “reasonable basis” on which to make statements, meaning the fact Mr. Musk said he believed he had secured a verbal agreement for the funding after the 31 July meeting could put him on a firmer footing with the SEC.
It remains unclear if his definition of “secured” matches those of a reasonable shareholder, who may believe the statement indicated Musk had a written agreement, they said.
Wall Street voiced doubts about Mr. Musk’s ability to pull off what could be the largest-ever go-private transaction, valued at as much as $72-B+
Mr. Musk says that most capital for the deal would come from equity and it would not be “wise” to burden the company with added debt. Discussing full details on the plan, including the source and nature of the funding, would be “premature” now, he said.
Overall, HeffX-LTN is Neutral TESLA
Latest posts by Paul Ebeling (see all)
- Wall Street’s Key Stock Analysts Research Report - February 24, 2020
- President Trump’s “Your Fired” List has been Prepared - February 24, 2020
- Commentary: Paul Ebeling on Wall Street - February 23, 2020