Musk’s roundabout finance runs on short sellers

  • 📰 Breakingviews
  • ⏱ Reading Time:
  • 35 sec. here
  • 2 min. at publisher
  • 📊 Quality Score:
  • News: 17%
  • Publisher: 51%

Malaysia News News

Malaysia Malaysia Latest News,Malaysia Malaysia Headlines

Tesla CEO Elon Musk’s roundabout finance runs on short sellers. AntonyMCurrie

The banks underwriting Tesla’s capital raise exercised their so-called greenshoe option on May 5 to increase the size of the deal. As a result, Tesla tapped investors for a total of $2.7 billion. The electric-car maker sold just over 3.5 million common shares at $243 apiece, raising a net $848 million. It also sold $1.84 billion of five-year bonds paying 2 percent interest a year and convertible into the company’s common stock at a premium of 27.5 percent to the equity offering price.

In a related transaction, Tesla paid $414 million, before the greenshoe, for a hedge “to reduce the potential dilution to the common stock and/or offset potential cash payments in excess of the principal amount upon any conversion.” Including the greenshoe that may be as high as $475 million, according to Breakingviews calculations. Société Générale, Wells Fargo, Goldman Sachs and Credit Suisse took the other side of the trade.

As part of the hedge the company run by Elon Musk sold warrants to the same four banks giving them the right to buy up to 10.3 million shares at a price of $607.50 each. This leg of the transaction yielded $152 million for Tesla.

 

Thank you for your comment. Your comment will be published after being reviewed.
Please try again later.
We have summarized this news so that you can read it quickly. If you are interested in the news, you can read the full text here. Read more:

 /  🏆 470. in MY

Malaysia Malaysia Latest News, Malaysia Malaysia Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

'Tesla dream' is dead as investors face 'Tesla reality,' market watcher saysTesla shares accelerated in the past week after being in reverse for most of the year. One market watcher says its U-turn could be short-lived. TradingNation Go SpaceX! TradingNation Yeah we know $tslaq ShortingIsFun TradingNation Hence the move to robot taxi. Musk wants in on that overvaluation we see with ride share companies.
Source: CNBC - 🏆 12. / 72 Read more »

Stocks making the biggest moves premarket: Kraft Heinz, IBM, CBS, Tesla, Boeing & moreThese are the stocks posting the largest moves before the bell. Why doesn't cnbc report on the $2 billion that FCA is paying Tesla to pool cars?
Source: CNBC - 🏆 12. / 72 Read more »

Stocks making the biggest moves premarket: 3M, Tesla, Caterpillar, Starbucks, Boeing & moreThese are the stocks posting the largest moves before the bell.
Source: CNBC - 🏆 12. / 72 Read more »