Date
18 August 2018
Investment bankers and analysts have serious doubts if Elon Musk will be able to raise the equity and debt financing needed for taking Tesla private. Photo: Reuters
Investment bankers and analysts have serious doubts if Elon Musk will be able to raise the equity and debt financing needed for taking Tesla private. Photo: Reuters

Tesla board seeking more info on Musk’s financing plan: report

Tesla’s board is seeking more information from CEO Elon Musk about how his US$72 billion plan to take the electric carmaker private will be financed, Reuters reports, citing people familiar with the matter.

The board’s request for more details adds to the scrutiny that Musk’s proposal is facing from investors and regulators, the report noted.

The US Securities and Exchange Commission is said to have already contacted Tesla to ask about Musk’s assertion on Twitter that funding for his proposed deal was “secured”.

Tesla’s board has held multiple discussions about the proposal, but it has not yet received a detailed financing plan from Musk, nor specific information on who will provide the funding, according to a Reuters source.

The board expects to make a decision on whether to launch a formal review of Musk’s proposal in the coming days, and is speaking to investment bankers about hiring financial advisers to assist it in its review in such scenario, the report said.

In a statement on Wednesday, Tesla’s board said its discussion with Musk “addressed the funding” for the deal, without offering more details.

If the board launches a formal review of Musk’s bid, he would have to recuse himself, or a special board committee would have to be formed, Reuters cited its sources as saying.

Musk announced on Twitter on Tuesday that he was considering taking Tesla private for US$420 per share, in what would be the biggest deal of this kind.

After jumping to close at US$379.57 on Tuesday, Tesla shares have since fallen about 7 percent to end at US$352.45 on Thursday, amid investor skepticism over the proposed deal.

On Thursday, the stock slumped nearly 5 percent.

Musk has said he would be looking to keep his ownership of Tesla at around 20 percent, and that a special purpose vehicle would allow Tesla shareholders to remain invested if they so choose.

Investment bankers and analysts reacted with skepticism, telling Reuters it would be hard for Musk to raise the equity and debt financing needed for the deal given that Tesla is yet to turn a profit.

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RC

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