Elon Musk Betting $100 Million On Tesla
Image via Flickr/ jdlasica
Tesla Motors is back in the news after its breakthrough quarterly report last week when it became the first new American car manufacturer to financially succeed in more than 50 years. Now, after its stock rose 25 percent within 24 hours of its May 8 announcement, the company plans to raise additional capital by offering more than 2 million shares of common stock. Tesla will also issue $450 million in convertible senior notes due in 2018. Plus, Tesla has granted its underwriters a 30-day option to purchase as many as 405,454 additional shares of common stock and $67.5 million in aggregate principal amount of notes.
While the stock talk is plenty exciting, it’s nothing compared to the announcement from CEO Elon Musk. Musk plans to purchase $100 million in common-stock shares at the same public-offering price. About $45 million will be purchased during the common-stock offering, while another $55 million will be purchased straight from Tesla in a private placement because of legal waiting-period requirements.
Combined, Tesla expects to raise $830 million in order to repay its outstanding loans with the department of energy. Other proceeds will be used for general corporate purposes.
Tesla shares closed May 15 at $84.84—up an additional $14 over its May 8 leap. But upon news of the capital raise, shares shot up an additional 5 percent in after-hours trading. In the eventful week, shares have increased by more than $29, an incredible 51-percent rise. Shares are up 8% Thursday morning.
