Tesla board evaluating Musk’s idea to take company private

Anna Jefferson
August 8, 2018

The company, which is losing money and burning through cash reserves, has not revealed how it plans to raise more than $70bn it needs to offer shareholders the $420 per share that Musk indicated.

Neither Elon nor Tesla has said yet where it's getting the money to go private.

A nine-word tweet sent by Tesla CEO Elon Musk helped earned the tech entrepreneur $1.4 billion in a single day.

"This included discussion as to how being private could better serve Tesla's long-term interests, and also addressed the funding for this to occur".

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Midway through the trading session in NY on Wednesday, Tesla shares were down 5% at $374 after surging 11% on Tuesday.

Also on Tuesday, the Financial Times reported that Saudi Arabia's public investment fund - a major backer of SoftBank's fund - had invested roughly $2 billion in Tesla for a stake representing 3% to 5% of the company.

Elon Musk's tweets early on Tuesday caused plenty of speculation and controversy.

Musk took Tesla shareholders and the stock market by surprise on Tuesday by announcing on Twitter he was considering taking the loss-making electric car-maker private at $420 USA a share.

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"I suspect the corporate lawyers are scrambling right now and hoping the SEC doesn't go after him and the company, because it could be viewed as a statement from Tesla", Peter Henning, a professor at Wayne State University Law School specializing in securities law, explained to the Detroit Free Press regarding Musk's tweet on Tuesday.

"What does Musk mean by 'funding secured?"' asked Toni Sacconaghi, an analyst at Bernstein who has always been bearish on Tesla shares. "And if you stay as a shareholder you get less information than before and you depend more and more on Elon Musk". There are no active talks between the companies now, said the people, who asked not to be identified discussing private deliberations.

Going private is one way to avoid close scrutiny by the public market as Musk and the company face those challenges.

Tesla's CEO also laid out what he envisions as the ideal path for going private. Musk has feuded publicly with regulators, critics, short sellers and reporters, and some analysts suggested that less transparency would be welcomed by Musk.

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The six board members who issued the statement on Wednesday included James Murdoch, chief executive of Twenty-First Century Fox Inc. and Brad Buss, who was the chief financial officer of solar panel maker SolarCity until it was bought by Tesla in 2016. Tesla's other board members are Musk, his brother Kimbal Musk and venture capitalist Steve Jurvetson.

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