Tesla raised $1.2 billion via share and convertible debt sale
- Author: Toni Ryan Mar 19, 2017,
Mar 19, 2017, 1:03
He purchased 95,420 common shares for $25 million in the latest stock sales.
Tesla TSLA, +0.66% said it sold 1.3 million shares at $262 to raise $250 million, and $850 million through the notes, due in 2022.
Recently, Tesla CEO Elon Musk took part in a call with investors where he detailed how the company plans to hasten the Model 3 delivery process.
Goldman, Sachs & Co., Deutsche Bank Securities, Citigroup and Morgan Stanley are acting as lead joint book-running managers for the offering, with Barclays, BofA Merrill Lynch and Credit Suisse acting as additional book-running managers. According to a document filed by the company with the Securities and Exchange Commission, the California-based manufacturer sold its stock at $262 per share, raising almost $350 million in proceeds, and another $850 million via convertible debt. The company notes that while they began offering the 60kWh model a year ago to make owning an electric vehicle more affordable, most buyers have ended up going for the Model S 75kWh.
To achieve this, Tesla will send the aforementioned instructional videos, as well as the paperwork, ahead of time.More news: Calais Campbell a badly needed boost for Jaguars' pass rush
"Liquidity and cash burn remain key near-term risks, and investors may grow tired of continued raises as this is the second capital raise in a year", wrote UBS analyst Colin Langan.
In other words, Tesla is spending about 15% of the net proceeds from these notes on the related hedges, so it will only collect about $708.5 million.
Tesla has secured a $1 billion (around Rs 6,317 crore) cash injection ahead of production of the Tesla Model 3, which will start in July. Also, as performance versions of the Model 3 will likely creep into Model S pricing territory-namely, the Model S 60's price-removing the entry-level Model S 60 should avoid brand cannibalization. This would raise a total of $1 billion, nearly exactly the amount of debt it is suggested Tesla needs to overcome.
"This is really a question of what's the risk tolerance of the company, or how close to the edge do we want to go", Musk said.