Tesla seeks US$2bn debt, capital raise

Electric vehicle manufacturer Tesla is seeking a US$2 billion (£1.5bn €1.7bn) debt and capital raise.

Following a loss in Q1, the EV pioneer is looking to sell just over 2.7 million common shares in the company, as well as circa US$1.35 billion (£1bn €1.2bn) in convertible bonds maturing in 2024.

If the underwriters choose to exercise their full option to purchase shares and bonds, then the company could shell out an additional US$202.5 million (£155m €180m) in bonds and up to just over 3.1 million in total shares.

Tesla CEO Elon Musk has also committed to buying US$10 million (£7.6m €8.9m) worth of stock.

The notes will be paid out biannually in May and November of each year, but carry numerous risk factors laid out by the company. Inter alia, Tesla said it may not have sufficient cash flow to pay out its obligations under the notes and that the notes would be subordinate to other senior debt.

Despite reliable increases in revenue over the years, Tesla has only had four profitable quarters in its history and has needed to stay afloat through capital raises and leverage.

The notes are underwritten by a heavyweight banking consortium comprising Goldman Sachs, Bank of America Merrill Lynch, Deutsche Bank, Morgan Stanley, Citigroup, Credit Suisse, Wells Fargo and Société Générale.


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