Tesla board seeks details on Musk's financing plan

Tesla board seeks details on Musk's financing plan

Whether the feds will actually take action is far from certain at this early stage, but the sharp, downward rebound of the company's stock price - which closed Thursday at $352.45, a 4.83% decline, suggests Musk will have to prove himself to investors, as well as the SEC.

Mr Musk laid out how he envisioned taking Tesla private both in tweets and in an email to employees that drew comparisons to Space Exploration Technologies Corporation, where he's also chairman and chief executive.

Tesla Inc.'s shares slipped nearly five per cent to a two-day low on Thursday, wiping out all the gains fuelled by chief executive Elon Musk's recent tweet announcing a plan to take the company private.

No major banks or investors have come forward to say that they have been contacted to help fund the take-private move - which, at about $70 billion, would be the largest LBO ever. "That's obviously an incredibly large valuation to somehow take into the private market".

All of which could be problematic as the Securities and Exchange Commission starts investigating the matter. The SEC declined to comment.

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.

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). "Something that might happen?" said Ira Matetsky, a partner at Ganfer & Shore in NY, outlining questions the SEC might ask.

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Some, though, were forced to concede they may not have secured the funding after all. Musk said that every six months, employees and external shareholders can buy and sell shares. A spokeswoman for the California State Teachers' Retirement System, which as of March owned about 213,000 shares, said there was no heads-up given. The courts have upheld the right of companies to release news by tweet, but they and their managers still must live with specific guidelines.

Analysts at Piper Jaffray, however, believe that Musk's latest comments may just be another publicity stunt by the CEO. "I wish we could be private with Tesla", he told Rolling Stone in an interview published in November.

The SEC routinely makes inquiries about companies' activities. Other investors include venture capitalists and private investors such as Draper Fisher Jurvetson, Founders Fund, Valor Equity Partners and Capricorn.

On August 8, 2018, Tesla's board issued a statement (Brad Buss, Robyn Denholm, Ira Ehrenpreis, Antonio Gracias, Linda Johnson Rice, and James Murdoch), "Last week, Elon opened a discussion with the board about taking the company private".

But "if no firmer details emerge", he wrote in a report to clients, "investors would likely increasingly debate Musk's credibility and seemingly unhealthy focus on the shares' price and volatility".

Investors have serious doubts about Elon Musk's plan to take Tesla private. "Would create special goal fund enabling anyone to stay with Tesla".

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