Tesla Looks to Raise as Much as $2.3 Billion in Debt and Equity


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Tesla Inc. is looking to raise as much as $2.3 billion through a bond sale and public offering of its shares, after a worse-than-expected quarter heightened concerns about the company’s cash on hand.
Tesla said in a securities filing that it expects to bring in about $642.3 million in net proceeds from
public offering of about 2.7 million of its shares, and that chief executive Elon Musk is interested in buying about $10 million worth of those shares
Tesla this morning filed a registration statement to raise capital through the issuance of convertible notes worth up to $1.55B and a TSLA share sale of up to $739M.
The amount of the bond new capital is very close to the loss in cash position over the first quarter which saw the auto and energy products maker’s cash holdings drop to $2.2B.

The convertible notes are due in 2024. Tesla expects to receive net proceeds from this offering of “approximately $1.3 billion” or “approximately $1.5 billion” if the underwriters decide to go with the additional notes available.

As for the equity raise, Tesla is offering 2,723,198 to 3,131,677 shares:

“Concurrently with this offering, we are offering 2,723,198 shares of our common stock (or 3,131,677 shares if the underwriters’ option to purchase additional shares of common stock in such offering is exercised in full) in a public offering. This offering is not contingent upon the closing of the concurrent common stock offering and the concurrent common stock offering is not contingent upon the closing of this offering.”

Tesla CEO Elon Musk said he was in for $10 million totaling about 42,000 new shares of the 2.7M being issued. Musk hinted at the share raise during the conference call last week.

“I don’t think raising capital should be a substitute for making the company operate more effectively. I do think there is some merit to raising capital, but is sort of probably about the wrong timing.”

Tesla shares have been on the decline in recent weeks, falling to a 2+ year low this week in the mid 230s. Already this morning in pre-market trading, the stock is up over 4% or 10 points.

Last quarter’s earnings were worse than what the market expected. Tesla noted that it sold very few vehicles in the first two months of the quarter with most Model 3 inventory being shipped to Europe and Asia. Model S and X sales were also down ahead of the new motors and suspension announced last week.

During the last month of the quarter Tesla made some erratic decisions first announcing the closure of most of its retail operations to coincide with the $35,000 Model 3 launch. Then it changed prices across the board, took the $35,000 Model 3 “off the menu,” and reinstated most of its retail operations.

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