teslamotorclub: Dear Elon: How about a capital raise to pay down the DOE loan? part 1

Dear Elon.

I think you must read these forums from time to time, so I thought I would drop you a line.

As I had posted on this forum, your recently announced earnings beat was quite obvious months ago to someone who was willing to study the situation.

On the conference call you said you hadn't thought about doing a capital raise. However your share price is now up 40% or more from the closing price on the day of the earnings report.

It's high unlikely that the marginal buyers here are long-time Tesla supporters, as most of us knew about the earnings beat nearly $40 ago. Much of the increase is from short sellers who made the foolish mistake of betting against you. They are now in a very difficult situation and due to the high cost of shorting they have no choice but to cover. The ongoing charges for borrowing shares are killing them.

Although I have no doubt Tesla shares will be worth quite a bit more years from now, the possibility of an economic hiccup in the time between is real. With the current share price, you could really do shareholders a service by raising capital via selling a small number of shares, perhaps 8 million? At current price this would allow you to raise over $500 million.

This $500 million would allow you to accelerate development programs and perhaps pay down the DOE loan. It would virtually guarantee the survival of Tesla for the decade to come, an incredibly valuable proposition for a shareholder.

There's a secondary beneficial impact of doing a capital raise: increased liquidity. Right now there are only about 60 million shares of Tesla that are available for investors. The rest are held by yourself, Fidelity, Daimler, Panasonic, and Toyota. Increasing the number of stakeholders will increase your chances of being included in the S&P 500 index and increase the number of Tesla supporters. Both of these are beneficial outcomes for existing shareholders.

I understand how shareholder friendly you are. I know you don't want dilute our holdings needlessly. However this is a wonderful opportunity you are being presented to get out of the government loan shadow and really protect the shareholders with a very small amount of dilution. In the future when the share price might be lower and/or Tesla has substantial cash flow you could consider doing a buyback to reduce the outstanding share count.

As the short position dwindles, the price will return to normal supply/demand dynamics and the current opportunity may be gone.

Thank you for doing all you have done.

Luv
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It's a good suggestion that makes business sense, but I suspect Elon already has a plan, which in fact may be exactly what you suggest - or not. I believe his plan is already in place and his incremental tweets and announcements only provide nourishment for his growing baby. The value of your letter is that others can read in plain English one way to ensure continued growth and sustainability for the company. If the shorts and naysayers can't see the viability of an EV company steering along the Musk path, then they will just be run over.
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Well stated and IMO a very correct proposal.

BTW luvb2b; I've been following you from the sidelines a bit on thelion, saw your post about buying Jun13 40 calls way back for 28 cents and over time selling them for an average of $28... 10000% gain... N.I.C.E!
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The one thing is that a secondary would provide much needed liquidity to short sellers. I do enjoy hearing them squeal in pain, and an offering would be a shot of morphine for them.

That doesn't mean it isn't the right thing to do. Just that it would bring an end to this squeeze.
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As I see it Citizen-T - you're spot on about some liquidity ending the short squeeze. It would also let the company be the primary beneficiary. For those of us with a long term perspective, the stock price will be back, and the company will be that much stronger financially (or at least, that's how I see it).
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Citizen-T said: ?

The one thing is that a secondary would provide much needed liquidity to short sellers. I do enjoy hearing them squeal in pain, and an offering would be a shot of morphine for them.

That doesn't mean it isn't the right thing to do. Just that it would bring an end to this squeeze.
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Well, if it was only 5-8 million shares they'd have to fight amongst themselves over them, as well as with fresh longs who are a little later (but not too late) to the party.
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Very nicely put, and I agree, it would be a good move. Might I suggest though, editing the title so that it's more descriptive? "Dear Elon: Now's the time to raise cash" perhaps?
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Johan said: ?

Well stated and IMO a very correct proposal.

BTW luvb2b; I've been following you from the sidelines a bit on thelion, saw your post about buying Jun13 40 calls way back for 28 cents and over time selling them for an average of $28... 10000% gain... N.I.C.E!
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thanks! i didn't know there was any overlap between here and the lion. what's your handle?

actually those were april 40s that i bought and rolled. near costless rolls as i used some profits to roll forward. quite a winner though.
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Off hand, I'm am increasingly leaning towards an opportunistic secondary because of a "bird in hand" and all of that.

That said, there are technical and economic reasons why GenIII will come out in 2017. Same thing with Model X delays.

Getting dollars now might not be able to accelerate that process at all, so the best use for them is likely to pay of an extremely low interest loan.

So if extra cash can't efficiently expedite development, is it still worth raising money just to pay down the loan? Maybe. And there might be other productive uses for the money, like expedited SuperCharger rollout, etc.

Regardless, unless demand craters I am seeing the clear potential for windfall profits in the 2015-2017 time frame. They should have the money to invest in the GenIII platform when that process is requiring peak funding levels.
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Tesla might have evidence to believe they can drive their share price to something closer to a stable $85 this year, or something. Might be a better time then.

Especially as adding that kind of news and sentiment to a stock that is clearly beyond volatile right now might be a bit nuts.

Why not wait it out until after more better than expected news in Q2 and even better forward projections and lots of good will and then introduce another offering which covers that kind of debt?
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and why not issue debt? seems like they could issue $500m for a reasonable rate given their revenue/ operational ramps.

of course the most capital efficient thing to do would be to pay back DOE on non-accelerated timeline, but they want to get out of political overhang so that seems more like a risk mgmt. decision.
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30seconds said: ?

the most capital efficient thing to do would be to pay back DOE on non-accelerated timeline, but they want to get out of political overhang so that seems more like a risk mgmt. decision.
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The best thing about the DOE loan is the clause that says Tesla can't be sold until the loan is paid off. Selfishly, I'd prefer to have Elon keep running Tesla for now. Once it's paid off, I can envision plenty of suitors eying Tesla's value and it could be hard to say no.
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30seconds said: ?

and why not issue debt? seems like they could issue $500m for a reasonable rate given their revenue/ operational ramps.

of course the most capital efficient thing to do would be to pay back DOE on non-accelerated timeline, but they want to get out of political overhang so that seems more like a risk mgmt. decision.
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Issuing debt would almost certainly violate DOE loan covenants and put them into default.
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maybe, maybe not. I don't see how the DOE could of put such covenants to the other program loans to Ford and Nissan. It was a 10 year loan, I'm sure the finance guys at Tesla were considering normal debt financing for operational expansion as part of their capital plan.

update:
Ford issued $2B in debt in Jan 2013. I don't think they have fully paid back the $5.9B ATVM loans yet.
Ford Issues $2 Billion of Bonds With 30-Year Maturity - Bloomberg
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I think this is a valid proposal, again, in terms of enhancing the staying power of the company in the face of any unforeseen external pressures. The conventional wisdom is, "raise money when you can, not when you need to."

However, there is one big problem with doing this now. We do not know yet if this price level is sustainable. It can be problematic and tarnishing of one's investor brand to sell out an offering and then watch all those new shareholders get quickly put under water. One get distracted by shareholder lawsuits, and all that BS.

So I hope a window does open where this would make sense, but to bank on this new market valuation seems a little premature.
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Vger said: ?

I think this is a valid proposal, again, in terms of enhancing the staying power of the company in the face of any unforeseen external pressures. The conventional wisdom is, "raise money when you can, not when you need to."

However, there is one big problem with doing this now. We do not know yet if this price level is sustainable. It can be problematic and tarnishing of one's investor brand to sell out an offering and then watch all those new shareholders get quickly put under water. One get distracted by shareholder lawsuits, and all that BS.

So I hope a window does open where this would make sense, but to bank on this new market valuation seems a little premature.
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i guess my point is you know there is huge demand right now for shares. it is coming from shorts who must find a way out.

once the short interest declines enough, you won't find this kind of desperate urgency to buy a stock hat has doubled after one of the most obviously telegraphed earnings beats ever.

i think if they put the feelers out they would know what kind of demand is out there. i am sure they could call morgan stanley or goldman and ask them to check with their clients.

there are numerous external factors that could cause headaches for tesla down the road. the capital is so cheap now compared to just 3 months ago... i recall that offering priced in the high $20s. now the stock is 4x higher. seems almost like a no brainer.

i know tesla has vast earnings potential. but it will take time to fully realize that potential. additional capital can guarantee they will have that time.

here are a few of the numerous uncontrollable risks:
1. higher interest rates lowering affordability.
2. some further contagion and chaos out of the euro zone
3. a recall of model s
4. global slowdown, which always hits car sales
5. changes to ev incentive regulations
6. natural disaster
7. legal woes fighting with dealers
8. potential for future liquidity crunch when it is time today off doe loan.

let the shorts provide the capital to guarantee tesla's survival... seems like a fine idea to me!
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This is an interesting thread. MY suggestion is that a secondary be in the form of a different class of stock. TSLA-B shares could be any combination of the following.....

1. Convertible preferred, for example
2. a vessel also intended as the stock options for incentivizing employees
3. carry different voting rights (could be greater; could be lesser - depends on corporate interest)

Benefits?

1. Provides more capital, at the "cheaper" rate that the significantly higher share price imbues.

2. Utterly pole-axes the shorts, in that the increased liquidity such an offering entails benefits the corporation but is absolutely unavailable to a short-seller (reason: if you're short TSLA, you can't buy TSLA-B to cover)

3. Mitigates the dilutive effect that otherwise accrues from stock options being exercised. From all I can fathom, stock options absolutely have to be figured in to any long-term corporate model - and given the company's ever-growing need for ever-more qualified engineers, etc., - there will have to be more and more such options put out there. Eventually, such do have a dilutive effect, but benefit present shareholders only in a very, very ephemeral way "strengthen the company". I've seen too many hundreds - or perhaps thousands - of corporations over the years for which such option-granting benefits only one class of people: the insiders. Yecch.

My two watts.
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AudubonB said: ?

This is an interesting thread. MY suggestion is that a secondary be in the form of a different class of stock. TSLA-B shares could be any combination of the following.....

1. Convertible preferred, for example
2. a vessel also intended as the stock options for incentivizing employees
3. carry different voting rights (could be greater; could be lesser - depends on corporate interest)

Benefits?

1. Provides more capital, at the "cheaper" rate that the significantly higher share price imbues.

2. Utterly pole-axes the shorts, in that the increased liquidity such an offering entails benefits the corporation but is absolutely unavailable to a short-seller (reason: if you're short TSLA, you can't buy TSLA-B to cover)

3. Mitigates the dilutive effect that otherwise accrues from stock options being exercised. From all I can fathom, stock options absolutely have to be figured in to any long-term corporate model - and given the company's ever-growing need for ever-more qualified engineers, etc., - there will have to be more and more such options put out there. Eventually, such do have a dilutive effect, but benefit present shareholders only in a very, very ephemeral way "strengthen the company". I've seen too many hundreds - or perhaps thousands - of corporations over the years for which such option-granting benefits only one class of people: the insiders. Yecch.

My two watts.
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I support a capital raise.
TSLA capital raises tend to put a hard support line on their prices. I only ask that elon seek out people who will have a skin in the game instead of throwing it all to retail investors...Like their suppliers.
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30seconds said: ?

maybe, maybe not. I don't see how the DOE could of put such covenants to the other program loans to Ford and Nissan. It was a 10 year loan, I'm sure the finance guys at Tesla were considering normal debt financing for operational expansion as part of their capital plan.

update:
Ford issued $2B in debt in Jan 2013. I don't think they have fully paid back the $5.9B ATVM loans yet.
Ford Issues $2 Billion of Bonds With 30-Year Maturity - Bloomberg
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I don't feel like digging up the loan documents or plowing through them again. Fundamentally it's due to a measurement of creditworthiness. I recall it being a debt/equity ratio of some kind. I do know they violated this covenant in September around the time they did their secondary and it required the renegotiation of the loan, with Tesla ultimately agreeing to faster repayment in exchange for not being forced into default status.

Regardless of the details think about it from the Federal perspective. Tesla is NOT Ford or Nissan. Tesla is a startup company with a terrible balance sheet. To even extend credit to them the Feds made Tesla promise that there would be no changes in leadership or ownership, they required the money be spent to meet certain milestones, and they required that Tesla stay financially strong enough to stay out of bankruptcy.

Allowing a poor credit risk (which Tesla is) to take on new debt is just not something that is done lightly, whether you are talking about consumer credit card issuers or the DOE.
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I agree with luvb2b, raising some capital now would be the best for the long term. Unrealized gains come and go.
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If Elon were to do this, he would wait until the last mystery announcement. They have been "goosing" the stock higher and I suspect the final "demostration" will be a game changer. If that is true, the stock will jump again and that could be the timing he's waiting for. The 5 part series seems to have shown a better "announcement" each time. I fully expect the last two to be the most exciting. People keep shorting the stock as it goes higher, what if Elon is setting them up???
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I think they won't do it, precisely because now is a good time to do it.

The problem is image to consumers. In order to sustain sales, Tesla has to appear to be stable long term and issuing new shares could affect consumer confidence, especially in a marketplace full of shorts and politicians actively campaigning for Tesla's failure. Tesla can't afford a drop in confidence in the marketplace. I don't think the large investors would like to have to pick up the pieces right now.
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ItsNotAboutTheMoney said: ?

I think they won't do it, precisely because now is a good time to do it.

The problem is image to consumers.
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I'm not following. What won't they do? What image problem does that present?
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AudubonB said: ?

I'm not following. What won't they do? What image problem does that present?
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The problem I see is with the type of investors you get if you do a raise. Increaing float usually means it is harder to move up or down. If 100% of TSLA shares is out there for trading right now, we wouldn't be seeing the short squeeze.

Since Elon seems to be a very investor friendly person, I would recommend creating incentives for holding the stock long term like Berkshire Hathaway did. It'd mean less trigger happy people. I am seeing an influx of new investors in many different forums who bought options based on luvb2b and capital's analysis. Yet they have no idea what these things do. They had an overnight success based on other people's effort and will probably suffer due to overconfidence soon. Not to mention, they are very fickle when things go sour.

One incentive is for those who hold through certain years to receive perks. Something that is not obtainable by any other means will create value. I'd like to get a piece of the early prototype battery to show my friends. Some failed crash test piece. Any part that means history of TSLA. It allow us to spread the doctrine of TSLA while at the same time stabilizing stock prices.

Making the annual shareholder event a big conference wouldn't hurt either.
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Since elon said on the conference call that they "haven't even had discussions" about raising capital, I would be shocked if he turned around and started having the talks right after the call. I think the conference call has bought us another quarter of no secondary being issued. Elon doesn't appear to be the type of person to imply one thing and do another... He's trying to build confidence.

On the other hand, if they issue a secondary, I'm buying hard on that dilution.
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A man has to know his limitations. Now I know why I never went public with my ventures
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lolachampcar said: ?

A man has to know his limitations. Now I know why I never went public with my ventures
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I can relate to that. Went public with one of several ventures. Too much for me and happy to come to terms with that limitation resulting in proper respect for those beyond my abilities, many of which don't apply themselves at all, unlike Elon and co who both possess and apply skills beyond my reach. But I will support them with my capital. Long TSLA
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seriously elon, please consider my suggestion. the stock is up 50% from the point at which you said you had no thoughts about an offering and that you might be opportunistic. the market has given a fabulous window to raise cash at minimal dilution to existing holders.
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I would wait until the after the remainder of these Muskesque announcements. And at that point, raise a small amount...5-10 million shares around $80-$100 isn't going to bother anyone on the planet. On top of it, he would lock the shares up (restrict sales of the shares) for at least 6 months. It'd be hard to argue against a debt free Tesla. Also, think of the marketing strategy of Tesla paying off the government early, with interest, and being able to expand faster than planned. I don't care what your political view is, but fiscal conservatives would be highly impressed. And finally, we wouldn't have to hear about stock dilution ever again.
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luvb2b said: ?

seriously elon, please consider my suggestion. the stock is up 50% from the point at which you said you had no thoughts about an offering and that you might be opportunistic. the market has given a fabulous window to raise cash at minimal dilution to existing holders.
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I think this is happening this week. Moved the Super Charger announcement and having "something else" this week. Now's the time. I wouldn't be shocked to see the stock go higher on this dilution as it ensures to a far higher degree the success of the company as you've pointed out.
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ShortSlaver said: ?

I think this is happening this week. Moved the Super Charger announcement and having "something else" this week. Now's the time. I wouldn't be shocked to see the stock go higher on this dilution as it ensures to a far higher degree the success of the company as you've pointed out.
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I really doubt he would have tweeted ahead of a offering. Also, I'm not sure they've had enough time to organize one if they weren't even talking about it before.
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luvb2b said: ?

seriously elon, please consider my suggestion. the stock is up 50% from the point at which you said you had no thoughts about an offering and that you might be opportunistic. the market has given a fabulous window to raise cash at minimal dilution to existing holders.
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I agree with the sentiment, but am not convinced right now is the time. I took a quick look at the new Morgan Stanley research, and its a ton better than the last note, which contained absurd, systematic errors. This report will be a roadmap for the rest of the analysts on Wall Street, so a lot of the bad information that has been floating around is about to be cleared up.

Once you clear the FUD away from the market, you are left with the reality that the Model S is an engineering masterpiece that has massive cost and performance advantages over ICE. And it is also blessed with regulatory advantages that have been being built up over years in order to force traditional automakers into exactly this kind of innovation.

When the traditional companies failed to react to either the technological changes which allow a Model S class vehicle, or the regulatory pressures to encourage them to make the switch, the market responded with a company dedicated to the task, which is better positioned to take advantage of both waves than any of its competition.

In the short term, I don't know where Mr. Toads Wild Ride will end. But in the very near future the market will for the first time be able to understand what the actual future earnings of this company are. Once that analysis works through the system the share price is going to find solid levels of support at an elevated level (if lower than now, not by much is my bet).

THAT is when you want to start thinking about issuing new shares.
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luvb2b said: ?

Dear Elon.
There's a secondary beneficial impact of doing a capital raise: increased liquidity. Right now there are only about 60 million shares of Tesla that are available for investors. The rest are held by yourself, Fidelity, Daimler, Panasonic, and Toyota. Increasing the number of stakeholders will increase your chances of being included in the S&P 500 index and increase the number of Tesla supporters. Both of these are beneficial outcomes for existing shareholders.
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Anyone else alarmed at the volume that was traded today. 37M shares. That is a lot of churn, over 50% of the float in a day. I miss the days of the slow grind higher on 2M-3M shares traded.
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GenIIIBuyer said: ?

Anyone else alarmed at the volume that was traded today. 37M shares. That is a lot of churn, over 50% of the float in a day. I miss the days of the slow grind higher on 2M-3M shares traded.
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Volatility attracts the day trading algorithms. I wouldn't read much into it. Remember, most of the people we are trading with are nothing at all like you and I, and many (if not most) of them aren't people at all.
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If the financing and servicing announcements along with the Consumer Reports accolades have inspired a deluge of orders, then by all means a subsequent offering of shares is needed to ramp up production and meet demand in such a timely fashion that it induces even more orders. I suspect that the market and analysts would react quite positively to the reasoning behind the move and ignore the effect of dilution.
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Here we go, looks like Elon does read this board! Shelf offering declared.

I luv luvb2b!:love:
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GenIIIBuyer said: ?

Here we go, looks like Elon does read this board! Shelf offering declared.

I luv luvb2b!:love:
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Yup

http://www.sec.gov/Archives/edgar/data/1318605/000119312513222292/d538756ds3asr.htm?source=email_rt_mc_body
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mixed share & debt no less. something for everyone
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After Hours trading seems to like this. Above $90 now.

- - - Updated - - -

Just came out, the offering itself it seems: (The previous SEC filing was a more generic registration)

Tesla Motors Announces Offerings of Common Stock and Convertible Senior Notes

Elon Musk to Lead Common Stock Offering; Tesla Intends to Pay Off Department of Energy Loan With Interest

PALO ALTO, CA -- (Marketwired) -- 05/15/13 -- Tesla Motors, Inc. (NASDAQ: TSLA) announced today offerings of 2,703,027 shares of common stock and $450 million aggregate principal amount of convertible senior notes due 2018 in concurrent underwritten registered public offerings. In addition, Tesla has granted the underwriters a 30-day option to purchase up to an additional 405,454 shares of common stock and $67.5 million in aggregate principal amount of the notes.

In addition, Elon Musk, Tesla's chief executive officer and cofounder, intends to purchase shares of common stock at the same public offering price for an aggregate purchase price of $100 million. Of this amount, approximately $45 million would be purchased in the common stock offering, and approximately $55 million would be purchased directly from Tesla in a subsequent private placement due to the waiting period requirements of the Hart-Scott-Rodino Act.

The aggregate gross proceeds of the offerings, including the options granted to the underwriters, and the private placement is expected to be approximately $830 million. Tesla intends to use the net proceeds from the offerings to prepay Tesla's outstanding loan from the United States Department of Energy, pay the cost of convertible note hedge transactions and for general corporate purposes.

The notes will be convertible into cash and, if applicable, shares of Tesla's common stock. The interest rate, conversion price and other terms of the notes are to be determined.

In connection with the offering of the notes, Tesla intends to enter into convertible note hedge transactions and warrant transactions which are generally expected to prevent dilution up to 100% over the offering stock price. In connection with establishing their initial hedge of the convertible note hedge and warrant transactions, the hedge counterparties or their affiliates expect to enter into various derivative transactions with respect to our common stock concurrently with or shortly after the pricing of the notes, including with certain investors in the notes.

Goldman, Sachs & Co. is acting as sole book-running manager for the offering of common stock. Goldman, Sachs & Co., Morgan Stanley and J.P. Morgan are acting as joint book-running managers for the notes offering.

An effective registration statement relating to the securities was filed with the Securities and Exchange Commission on May 15, 2013. The offering of these securities will be made only by means of prospectus supplements and the accompanying prospectus. Copies of the final prospectus supplements and accompanying prospectus may be obtained from Goldman, Sachs & Co., via telephone: (866) 471-2526; facsimile: (212) 902-9316; email: [email�protected]; or standard mail at Goldman, Sachs & Co., Attn: Prospectus Department, 200 West Street, New York, NY 10282-2198; from Morgan Stanley & Co. LLC, Attn: Prospectus Department, 180 Varick Street, Second Floor, New York, NY 10014, or by telephone at (866) 718-1649 or email: [email�protected]; or from J.P. Morgan Securities LLC, via telephone: (866) 803-9204; or standard mail at c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. The securities being offered have not been approved or disapproved by any regulatory authority, nor has any such authority passed upon the accuracy or adequacy of the registration statement, the prospectus contained therein or the prospectus supplements.

ABOUT TESLA

Tesla Motors' (NASDAQ: TSLA) goal is to accelerate the world's transition to electric mobility with a full range of increasingly affordable electric cars. California-based Tesla designs and manufactures EVs, as well as EV powertrain components for partners such as Toyota and Daimler. Tesla has delivered almost 10,000 electric vehicles to customers in 31 countries.

Forward-Looking Statement
Certain statements in this press release, including statements regarding the proposed public offering of common stock and notes, the convertible note hedge and warrant transactions and the private placement, are "forward-looking statements" that are subject to risks and uncertainties. These forward-looking statements are based on management's current expectations, and as a result of certain risks and uncertainties, actual events or results may differ materially from those contained in the forward-looking statements. Please refer to the registration statement on Form S-3 filed by Tesla today with the SEC and the prospectus and prospectus supplements included or incorporated by reference therein, as well as the other documents Tesla files on a consolidated basis from time to time with the SEC, specifically Tesla's most recent Form 10-K and Form 10-Q. These documents contain and identify important factors that could cause the actual results for Tesla on a consolidated basis to differ materially from those contained in Tesla's forward-looking statements. Although Tesla believes that the expectations reflected in the forward-looking statements are reasonable, Tesla cannot guarantee future results, levels of activity, performance or achievements. Tesla disclaims any obligation to update information contained in these forward-looking statements after the date of this press release to conform to actual results.

Investor Relations Contact:
Jeff Evanson
Tesla Motors
Email Contact

Press Contact:
Sarah Meron
Tesla Motors
Email Contact

Source: Tesla Motors, Inc.
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luvb2b2: Excellent understanding as ususal you we're two steps ahead!
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Citizen-T said: ?

I really doubt he would have tweeted ahead of a offering. Also, I'm not sure they've had enough time to organize one if they weren't even talking about it before.
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I respectfully disagree.
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Disagree with respect to which statement? That Elon would have tweeted about an offering in advance or that the offering was drummed up very recently?
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Johan said: ?

luvb2b2: Excellent understanding as ususal you we're two steps ahead!
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well you gotta hand it to elon. i've never seen a ceo who has it in for shorts so badly. what he's doing is raising money without issuing very many shares. by using convertible debt, the debt can be priced off of the shares, but the shares will never exist til sometime in the future. the shorts won't be able to use the convertible debt to hedge because holding tesla shares short is just too expensive.

and in fact, because the you can earn so much loaning out the shares, you'll find hedge funds may do the reverse arbitrage - that is, they buy tesla shares and short the convertible debt. the idea is the hedgie buys tesla and loans out the shares, earning 30%+ in the short term. the convertible debt is shorted and requires some low interest payment (which doesn't matter much compared to the 30%). and the convertible debt provides a hedge to the long tesla position, protecting against some of the downside. if this trade starts happening, it will skew the price of the convertibles low and push the share price perhaps higher.

i'm trying to understand all this business about hedging the dilution of the convertible:

"The notes will be convertible into cash and, if applicable, shares of Tesla's common stock. The interest rate, conversion price and other terms of the notes are to be determined.In connection with the offering of the notes, Tesla intends to enter into convertible note hedge transactions and warrant transactions which are generally expected to prevent dilution up to 100% over the offering stock price. In connection with establishing their initial hedge of the convertible note hedge and warrant transactions, the hedge counterparties or their affiliates expect to enter into various derivative transactions with respect to our common stock concurrently with or shortly after the pricing of the notes, including with certain investors in the notes."

essentially a hedge against the note conversion would likely be tesla buying some kind of call options (or call spreads as there appears to be a cap). presumably they would exercise these calls as the notes got converted. what i don't understand is what the warrants are for, as warrants would involve newly issued shares being created. i can't really say i understand all this, except that what it does is it forces the counterparty to the conversion hedge to be short some kind of weird call option. presumably that counterparty then hedges the trade by buying shares of tesla (as typically short calls are hedged with long stock).

and then finally you have elon buying $100 million of stock in the offering. this is the dumbest part of the whole announcement. why didn't he buy $100 million when they did the offering at $27 just 6-8 months ago? my guess is that as he did in a prior offering, he is using his goldman line of credit backed by spacex/solar city/tesla. that credit line has surely grown recently, and he's putting $100 million of it to work. but it is actually quite idiotic. he already has his balance sheet at risk backing tesla's buyback guarantee. he already has a margin loan for tesla shares. and he already has a shi1-ton of tesla options. to buy relatively little at $28 and then after a 3x jump in the price he jumps in huge? that would be really poor trade management in nearly all circumstances (there are a few exceptions i can think of).

imo all this makes for great headlines, but unless i am misunderstanding something, elon has lost his mind. the structure of the offering seems to be designed to raise capital and goose tesla stock higher. the capital raise is good but i would argue that at this point it's almost intentional manipulation trying to drive the stock higher. now maybe tesla's sales and earnings are going to be good enough to justify whatever that higher price might be, but honestly i can't understand why they are manipulating the stock this way. the convertible note hedge transactions throw a whole bunch of opacity over the whole thing: what derivative transactions will be entered behind the scenes, who will participate, and how will they affect the shares? these are all unknown to shareholders.

and it seems the result is that more tesla shares will end up in the hands of hedge funds and investment banks who are using them for sophisticated trading strategies related to the hedges and the convertibles. fewer shares will be in the hand of long-term tesla investors. and volatility in the stock price will increase. it has been (and may continue to be) great fun on the way up. but some day it will turn down as sure as the tide eventually goes out. and the drop could be very painful.

oh and by the way, we don't even know how many shorts are left in the stock. nearly 110 million shares traded in the last 5 sessions, so presumably a lot of the old shorts have covered.

i know from a shareholder point of view there is some excitement that he's taking a knife to the back of the short-sellers. the offering is great and an amount similar to what i hoped they would raise. it's awesome they can do it without issuing shares. the "hot money" in tesla is going to love this announcement.

however i feel he is going too far here with some of these additional complexities. i don't believe these complexities serve the long term owners of the company. what i see happening in the future is that after the shorts are pounded to oblivion the cost of shorting will drop. at that time a lot of people who are holding shares to take advantage of loaning them out (like the stooges from the rolling naked short thread) will start to sell those shares. hedgies who are doing the trades described above will not want their shares either. and meanwhile the shorts who would otherwise support the price in a falling market will be gone. with the price artificially inflated, absence of demand from shorts, and plenty of supply from longs unwinding random derivative strategies, i would expect the subsequent drop to be exaggerated as well. i'm not describing a short process here, this is something that would likely play out over a matter of many months. maybe by then elon will have done something to justify a $15 billion fully-diluted valuation, which will happen probably by $110-120/share and things will be completely different than my debbie-downer scenario.

almost every company i've seen go to war with the shorts has ended up having some major declines in share price. i like to see tesla be shareholder friendly, but going too far to murder the shorts is not something i like to see. i think what would have been better is to just keep executing and letting the stock work its way higher naturally, keep the shorts engaged with whatever nonsense gets them to short. those shorts would basically guarantee outperformance of telsa stock in a down market and offer a constant supply of buyers to keep buoying the share price. any increase in share price would have unfolded over a longer period of time, and long term tesla owners would have been more likely to not be flushed out by high volatility.

that's my 2c. happy & sad at the same time. luv to hear other people's opinions.
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Perhaps the purchase by Elon is designed to mitigate some kind of IRS consequences? Doesn't he get a bonus for delivering 10k of Model S?
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luvb2b said: ?

well you gotta hand it to elon. i've never seen a ceo who has it in for shorts so badly. what he's doing is raising money without issuing very many shares. by using convertible debt, the debt can be priced off of the shares, but the shares will never exist til sometime in the future. the shorts won't be able to use the convertible debt to hedge because holding tesla shares short is just too expensive.

and in fact, because the you can earn so much loaning out the shares, you'll find hedge funds may do the reverse arbitrage - that is, they buy tesla shares and short the convertible debt. the idea is the hedgie buys tesla and loans out the shares, earning 30%+ in the short term. the convertible debt is shorted and requires some low interest payment (which doesn't matter much compared to the 30%). and the convertible debt provides a hedge to the long tesla position, protecting against some of the downside. if this trade starts happening, it will skew the price of the convertibles low and push the share price perhaps higher.

i'm trying to understand all this business about hedging the dilution of the convertible:

"The notes will be convertible into cash and, if applicable, shares of Tesla's common stock. The interest rate, conversion price and other terms of the notes are to be determined.In connection with the offering of the notes, Tesla intends to enter into convertible note hedge transactions and warrant transactions which are generally expected to prevent dilution up to 100% over the offering stock price. In connection with establishing their initial hedge of the convertible note hedge and warrant transactions, the hedge counterparties or their affiliates expect to enter into various derivative transactions with respect to our common stock concurrently with or shortly after the pricing of the notes, including with certain investors in the notes."

essentially a hedge against the note conversion would likely be tesla buying some kind of call options (or call spreads as there appears to be a cap). presumably they would exercise these calls as the notes got converted. what i don't understand is what the warrants are for, as warrants would involve newly issued shares being created. i can't really say i understand all this, except that what it does is it forces the counterparty to the conversion hedge to be short some kind of weird call option. presumably that counterparty then hedges the trade by buying shares of tesla (as typically short calls are hedged with long stock).

and then finally you have elon buying $100 million of stock in the offering. this is the dumbest part of the whole announcement. why didn't he buy $100 million when they did the offering at $27 just 6-8 months ago? my guess is that as he did in a prior offering, he is using his goldman line of credit backed by spacex/solar city/tesla. that credit line has surely grown recently, and he's putting $100 million of it to work. but it is actually quite idiotic. he already has his balance sheet at risk backing tesla's buyback guarantee. he already has a margin loan for tesla shares. and he already has a shi1-ton of tesla options. to buy relatively little at $28 and then after a 3x jump in the price he jumps in huge? that would be really poor trade management in nearly all circumstances (there are a few exceptions i can think of).

imo all this makes for great headlines, but unless i am misunderstanding something, elon has lost his mind. the structure of the offering seems to be designed to raise capital and goose tesla stock higher. the capital raise is good but i would argue that at this point it's almost intentional manipulation trying to drive the stock higher. now maybe tesla's sales and earnings are going to be good enough to justify whatever that higher price might be, but honestly i can't understand why they are manipulating the stock this way. the convertible note hedge transactions throw a whole bunch of opacity over the whole thing: what derivative transactions will be entered behind the scenes, who will participate, and how will they affect the shares? these are all unknown to shareholders.

and it seems the result is that more tesla shares will end up in the hands of hedge funds and investment banks who are using them for sophisticated trading strategies related to the hedges and the convertibles. fewer shares will be in the hand of long-term tesla investors. and volatility in the stock price will increase. it has been (and may continue to be) great fun on the way up. but some day it will turn down as sure as the tide eventually goes out. and the drop could be very painful.

oh and by the way, we don't even know how many shorts are left in the stock. nearly 110 million shares traded in the last 5 sessions, so presumably a lot of the old shorts have covered.

i know from a shareholder point of view there is some excitement that he's taking a knife to the back of the short-sellers. the offering is great and an amount similar to what i hoped they would raise. it's awesome they can do it without issuing shares. the "hot money" in tesla is going to love this announcement.

however i feel he is going too far here with some of these additional complexities. i don't believe these complexities serve the long term owners of the company. what i see happening in the future is that after the shorts are pounded to oblivion the cost of shorting will drop. at that time a lot of people who are holding shares to take advantage of loaning them out (like the stooges from the rolling naked short thread) will start to sell those shares. hedgies who are doing the trades described above will not want their shares either. and meanwhile the shorts who would otherwise support the price in a falling market will be gone. with the price artificially inflated, absence of demand from shorts, and plenty of supply from longs unwinding random derivative strategies, i would expect the subsequent drop to be exaggerated as well. i'm not describing a short process here, this is something that would likely play out over a matter of many months. maybe by then elon will have done something to justify a $15 billion fully-diluted valuation, which will happen probably by $110-120/share and things will be completely different than my debbie-downer scenario.

almost every company i've seen go to war with the shorts has ended up having some major declines in share price. i like to see tesla be shareholder friendly, but going too far to murder the shorts is not something i like to see. i think what would have been better is to just keep executing and letting the stock work its way higher naturally, keep the shorts engaged with whatever nonsense gets them to short. those shorts would basically guarantee outperformance of telsa stock in a down market and offer a constant supply of buyers to keep buoying the share price. any increase in share price would have unfolded over a longer period of time, and long term tesla owners would have been more likely to not be flushed out by high volatility.

that's my 2c. happy & sad at the same time. luv to hear other people's opinions.
Click to expand...

Well, your understanding of this stuff is much better than mine, but I think much of Elon's genius is in creative financing plays. So at this point I'm trusting him to know what he's doing. As someone pointed out, his $100M investment looks like paying back at 82% overnight.
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luvb2b said: ?

essentially a hedge against the note conversion would likely be tesla buying some kind of call options (or call spreads as there appears to be a cap). presumably they would exercise these calls as the notes got converted. what i don't understand is what the warrants are for, as warrants would involve newly issued shares being created. i can't really say i understand all this, except that what it does is it forces the counterparty to the conversion hedge to be short some kind of weird call option. presumably that counterparty then hedges the trade by buying shares of tesla (as typically short calls are hedged with long stock).
Click to expand...

The transaction is set up this way so that the first two legs can be integrated (debt issuance plus purchased call) for tax purposes, creating tax-deductable OID interest. The third leg (selling a warrant), will have a higher strike, and longer maturity, and will be far enough away from the debt/purchased call strikes that the three legs will each pass muster as separate legitimate economic transactions for tax purposes. The net impact is the ability to issue convertible debt with a strike price very far out of the money (100% above the current price, apparently, in this transaction), much further out of the money than would usually be tolerated in the plain-vanilla convert market.

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luvb2b said: ?

imo all this makes for great headlines, but unless i am misunderstanding something, elon has lost his mind.
Click to expand...

I think if you look at the last few months of activity (including Musk's participation in the equity raise here) through this lens, it makes a lot more sense. IMO Musk is teaching a master-class in putting the theory of reflexivity to maximum benefit for a high-growth-stage company in a capital intensive business.
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luvb2b said: ?

and then finally you have elon buying $100 million of stock in the offering. this is the dumbest part of the whole announcement. why didn't he buy $100 million when they did the offering at $27 just 6-8 months ago? my guess is that as he did in a prior offering, he is using his goldman line of credit backed by spacex/solar city/tesla. that credit line has surely grown recently, and he's putting $100 million of it to work. but it is actually quite idiotic. he already has his balance sheet at risk backing tesla's buyback guarantee. he already has a margin loan for tesla shares. and he already has a shi1-ton of tesla options. to buy relatively little at $28 and then after a 3x jump in the price he jumps in huge? that would be really poor trade management in nearly all circumstances (there are a few exceptions i can think of).

imo all this makes for great headlines, but unless i am misunderstanding something, elon has lost his mind. the structure of the offering seems to be designed to raise capital and goose tesla stock higher. the capital raise is good but i would argue that at this point it's almost intentional manipulation trying to drive the stock higher. now maybe tesla's sales and earnings are going to be good enough to justify whatever that higher price might be, but honestly i can't understand why they are manipulating the stock this way. the convertible note hedge transactions throw a whole bunch of opacity over the whole thing: what derivative transactions will be entered behind the scenes, who will participate, and how will they affect the shares? these are all unknown to shareholders.
Click to expand...

This is the truly interesting bit. I'm 100% on-board with they are being bought for a considerable profit. It never hurts to put on your best face when there are people bidding on you.

They are the darling tech startup in the valley and prime for a buyout of some sort.
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@lub2b

I think Elon's purchase is part of the anti-shorting plan.

I think your analysis of the results of driving out the shorts is relevant. However, it only concerns the financial side. Unless Elon will need more money to fund his expansion later, he just does not care. What he cares about is "the real economy". He simply does not want all these people lurking in the shadows with knives. So he is trying to drive then out of their positions, so they stop caring enough to try to work against the company.
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DonPedro said: ?

@lub2b

I think Elon's purchase is part of the anti-shorting plan.

I think your analysis of the results of driving out the shorts is relevant. However, it only concerns the financial side. Unless Elon will need more money to fund his expansion later, he just does not care. What he cares about is "the real economy". He simply does not want all these people lurking in the shadows with knives. So he is trying to drive then out of their positions, so they stop caring enough to try to work against the company.
Click to expand...

I do not have the knowledge to comment on the financial side of things, but I do agree with this. Especially the last sentence.
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ModelS8794 said: ?

The transaction is set up this way so that the first two legs can be integrated (debt issuance plus purchased call) for tax purposes, creating tax-deductable OID interest. The third leg (selling a warrant), will have a higher strike, and longer maturity, and will be far enough away from the debt/purchased call strikes that the three legs will each pass muster as separate legitimate economic transactions for tax purposes. The net impact is the ability to issue convertible debt with a strike price very far out of the money (100% above the current price, apparently, in this transaction), much further out of the money than would usually be tolerated in the plain-vanilla convert market.
Click to expand...

i replied about this in the short term price movements thread, but i believe these structures are actually relatively common in the convert market; based on my understanding, by entering into these hedging transactions tesla is able to increase the strike price (by up to 100% -- or double); all this is achieved through a series of financial transactions that costs the company money today, but (in theory) should result in less dilution to the existing shareholders.

thus the hedging transaction should be to the benefit of current shareholders assuming you are a believer in the long term value of the company.

surfside
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AudubonB said: ?

MY suggestion is that a secondary be in the form of a different class of stock. "TSLA-B" shares could be any combination of the following.....

1. Convertible preferred, for example
Click to expand...

From 10 May. Am already getting sore from patting myself on the back here....
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ModelS8794 said: ?

The transaction is set up this way so that the first two legs can be integrated (debt issuance plus purchased call) for tax purposes, creating tax-deductable OID interest. The third leg (selling a warrant), will have a higher strike, and longer maturity, and will be far enough away from the debt/purchased call strikes that the three legs will each pass muster as separate legitimate economic transactions for tax purposes. The net impact is the ability to issue convertible debt with a strike price very far out of the money (100% above the current price, apparently, in this transaction), much further out of the money than would usually be tolerated in the plain-vanilla convert market.
Click to expand...

thank you for explaining that, and it makes perfect sense. so my suspicion then is correct, that whoever is taking the other side of the call options that tesla acquires will have to hedge them with either the convertible debt or tesla shares. basically every aspect of this offering screws the shorts in some way. i'm not sure i've seen anything designed with such malicious intent before.

not that we mind malicious intent against shorts :biggrin:

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ModelS8794 said: ?

I think if you look at the last few months of activity (including Musk's participation in the equity raise here) through this lens, it makes a lot more sense. IMO Musk is teaching a master-class in putting the theory of reflexivity to maximum benefit for a high-growth-stage company in a capital intensive business.
Click to expand...

would you believe alchemy of finance is sitting right here on my desk? i was just re-reading it recently so i'm familiar with what you are saying. and i agree here the perception of the company doing well is augmenting the company's balance sheet and their ability to do well. it is a reflexive loop.

i guess what i'm saying is that i still find this structure too much for no reason other than to screw the shorts. there are aspects of it that just don't make a lot of sense, for example:

1. they're swapping public debt for private debt here, which makes sense to get out of the government's umbrella. but then they are actually adding more debt to the balance sheet. why? the equity at these prices seems quite cheap to me so what economic reason is there to issue more debt other than to screw the shorts by not making shares available? i understand this is a convertible offering, so it's a hybrid security. but if the shares happen to go lower i think that debt will become payable in cash and not shares, right?

2. on top of issuing this debt there is this bizarre matter of elon putting in $100 million after the price has tripled. it just makes no sense to me. the stock was so obviously a buy at $28, why didn't he do it then? obviously his putting money in is a huge show of confidence and it seems designed to scare shorts even more. but wait, he's not putting his money. he's borrowing money on a margin loan using existing tesla stock.

the shorts have been providing a constant bid underneath the stock for years. if you try to pound them to oblivion in one swift stroke, they won't be around to hold up the stock thru the inevitable ups and downs and we're going to have a lot more volatility if the shares ever.

i guess i would have preferred something quite a bit simpler. but regardless of my opinion this is a brilliantly designed structure for screwing the shorts. probably tesla goes to $100+ on this news.
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luvb2b said: ?

i'm trying to understand all this business about hedging the dilution of the convertible:

"The notes will be convertible into cash and, if applicable, shares of Tesla's common stock. The interest rate, conversion price and other terms of the notes are to be determined.In connection with the offering of the notes, Tesla intends to enter into convertible note hedge transactions and warrant transactions which are generally expected to prevent dilution up to 100% over the offering stock price. In connection with establishing their initial hedge of the convertible note hedge and warrant transactions, the hedge counterparties or their affiliates expect to enter into various derivative transactions with respect to our common stock concurrently with or shortly after the pricing of the notes, including with certain investors in the notes."
Click to expand...

From a former Salesforce.com (CRM) short who gave up over a year ago, I remember reading in Salesforce's filings about what sounds like an identical convertible bond, with the calls to hedge against extra dilution. May be something worth looking at for reference if you're curious how it will look when its a done deal.

If Salesforce.com is valued at $25B, then there's no reason that Telsa should not be. Tesla has achieved equal profitability (0) and revenue run rates to Salesforce in a fraction of the time, and is disruptive to a much larger market. As a CRM short, I hated Marc Beinoff (CEO) and the gamesmanship that he pulled to support the CRM stock price. I believe Marc Beinoff is a Tesla Roadster and Model S owner, someone who Elon could call up for advice.

Short CRM, Long TSLA would be a good pair trade IMO. Maybe I'll bring that short back. Definitely enjoying having a CEO out for the shorts much more this time around from the long side. Unlike Salesforce, I think Tesla is the real deal too.
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If (and admittedly, still a very very big if!) Tesla is destined to scale up to a size approaching Porsche or God help us BMW, then it will have made no sense to capitalize the company with straight equity all the way up. Cost of capital on the stock may look cheap to you today, but for someone like Musk on the ten year plan, proper capital structure surely involves some debt, and now is a fine time to start (with a hybrid anyway). proof of that will be in the debt terms, so just a conjecture for now. We'll see soon enough.
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I've been on the other side of that CRM trade for several years now. Sorry you got burned, but I could have told you that was the wrong stock to short.
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GenIIIBuyer said: ?

If Salesforce.com is valued at $25B, then there's no reason that Telsa should not be. Tesla has achieved equal profitability (0) and revenue run rates to Salesforce in a fraction of the time, and is disruptive to a much larger market. As a CRM short, I hated Marc Beinoff (CEO) and the gamesmanship that he pulled to support the CRM stock price. I believe Marc Beinoff is a Tesla Roadster and Model S owner, someone who Elon could call up for advice.

Unlike Salesforce, I think Tesla is the real deal too.
Click to expand...

Agree Tesla is the real deal!!
Not sure the market is bigger, but do agree it's much more disruptive - there's is a con against a SalesForce though- the scalability is much slower and much more costly- creating it's own challenges
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luvb2b said: ?

thank you for explaining that, and it makes perfect sense. so my suspicion then is correct, that whoever is taking the other side of the call options that tesla acquires will have to hedge them with either the convertible debt or tesla shares. basically every aspect of this offering screws the shorts in some way. i'm not sure i've seen anything designed with such malicious intent before.

not that we mind malicious intent against shorts :biggrin:

- - - Updated - - -

would you believe alchemy of finance is sitting right here on my desk? i was just re-reading it recently so i'm familiar with what you are saying. and i agree here the perception of the company doing well is augmenting the company's balance sheet and their ability to do well. it is a reflexive loop.

i guess what i'm saying is that i still find this structure too much for no reason other than to screw the shorts. there are aspects of it that just don't make a lot of sense, for example:

1. they're swapping public debt for private debt here, which makes sense to get out of the government's umbrella. but then they are actually adding more debt to the balance sheet. why? the equity at these prices seems quite cheap to me so what economic reason is there to issue more debt other than to screw the shorts by not making shares available? i understand this is a convertible offering, so it's a hybrid security. but if the shares happen to go lower i think that debt will become payable in cash and not shares, right?

the shorts have been providing a constant bid underneath the stock for years. if you try to pound them to oblivion in one swift stroke, they won't be around to hold up the stock thru the inevitable ups and downs and we're going to have a lot more volatility if the shares ever.

i guess i would have preferred something quite a bit simpler. but regardless of my opinion this is a brilliantly designed structure for screwing the shorts. probably tesla goes to $100+ on this news.
Click to expand...

Hmm.. I haven't had time to sort through the release, didn't realize that this wasn't just a new secondary. I'll need to sort this out later.

2. on top of issuing this debt there is this bizarre matter of elon putting in $100 million after the price has tripled. it just makes no sense to me. the stock was so obviously a buy at $28, why didn't he do it then? obviously his putting money in is a huge show of confidence and it seems designed to scare shorts even more. but wait, he's not putting his money. he's borrowing money on a margin loan using existing tesla stock.
Click to expand...

Why is this not just him exercising his options? He was able to exercise ~$50m before, and as of yesterday they passed the 10,000 delivery mark so he got a new tranche of options. Can't run down if they are $50m worth, but it seems credible to me.

Edit:

but wait, he's not putting his money. he's borrowing money on a margin loan using existing tesla stock.
Click to expand...

Ahh, just saw this. Do we know this is true?
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i could also express my view this way:

if they had done a vanilla share offering, the stock price would have come down in the short term. shares would most likely be placed with institutions who wanted to be long term owners of the stock but missed it on the way up. the increased valuation would have given it a higher future weighting in any indexes that tesla got added to, as well as increasing the likelihood of index addition due to the larger market cap. some shorts would have covered, but others would have found more shares to short or to stay short. these shorts would have been dragged slowly behind the tesla plow, their blood effectively fertilizing the ground as their bleeding carcasses slid across the soil. since there is no debt left bankruptcy risk is essentially zero.

by doing this carefully structured offering, the long term investors who want a pull back to buy tesla aren't going to be able to get shares. they won't chase as a matter of discipline, so they won't get in. meanwhile more shares will end up in the hands of those hedging the weird call option, and in the hands of hedge funds who are doing stock-loan / convertible bond arbitrage as i described earlier. the short term impact on the stock price will be positive and you will pile drive the shorts out. meanwhile debt increases on the balance sheet so bankruptcy can't be counted out as a worst case scenario. without shorts to support the stock as it drops, the stock will be more volatile (on the way down).

now tell me which would you prefer as a long term owner of the stock? just my opinion. k.i.s.s.
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luvb2b said: ?

i could also express my view this way:

if they had done a vanilla share offering, the stock price would have come down in the short term. shares would most likely be placed with institutions who wanted to be long term owners of the stock but missed it on the way up. the increased valuation would have given it a higher future weighting in any indexes that tesla got added to, as well as increasing the likelihood of index addition due to the larger market cap. some shorts would have covered, but others would have found more shares to short or to stay short. these shorts would have been dragged slowly behind the tesla plow, their blood effectively fertilizing the ground as their bleeding carcasses slid across the soil. since there is no debt issued bankruptcy risk is essentially zero.
Click to expand...

This is what I had thought had happened. Hadn't been able to really read the release.

by doing this carefully structured offering, the long term investors who want a pull back to buy tesla aren't going to be able to get shares. they won't chase as a matter of discipline, so they won't get in. meanwhile more shares will end up in the hands of those hedging the weird call option, and in the hands of hedge funds who are doing stock-loan / convertible bond arbitrage as i described earlier. the short term impact on the stock price will be positive and you will pile drive the shorts out. meanwhile debt increases on the balance sheet so bankruptcy can't be counted out as a worst case scenario. without shorts to support the stock as it drops, the stock will be more volatile (up & down).

now tell me which would you prefer as a long term owner of the stock? just my opinion. k.i.s.s.
Click to expand...

Option A. I'll need to delve into this when I am less busy.
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luvb2b said: ?

i could also express my view this way:

if they had done a vanilla share offering, the stock price would have come down in the short term. shares would most likely be placed with institutions who wanted to be long term owners of the stock but missed it on the way up. the increased valuation would have given it a higher future weighting in any indexes that tesla got added to, as well as increasing the likelihood of index addition due to the larger market cap. some shorts would have covered, but others would have found more shares to short or to stay short. these shorts would have been dragged slowly behind the tesla plow, their blood effectively fertilizing the ground as their bleeding carcasses slid across the soil. since there is no debt left bankruptcy risk is essentially zero.

by doing this carefully structured offering, the long term investors who want a pull back to buy tesla aren't going to be able to get shares. they won't chase as a matter of discipline, so they won't get in. meanwhile more shares will end up in the hands of those hedging the weird call option, and in the hands of hedge funds who are doing stock-loan / convertible bond arbitrage as i described earlier. the short term impact on the stock price will be positive and you will pile drive the shorts out. meanwhile debt increases on the balance sheet so bankruptcy can't be counted out as a worst case scenario. without shorts to support the stock as it drops, the stock will be more volatile (on the way down).

now tell me which would you prefer as a long term owner of the stock? just my opinion. k.i.s.s.
Click to expand...

yep - this effectively describes my concern as well. It keeps the short squeeze in play making a long term buyer less willing (myself included). Instead of having short covering over the same time period as a Tesla scale up (mfg/profitability/modX etc) allowing a price support for a long term investment now, I have to instead make a trade investment that recognizes the price is likely to spike, then fall. For example I see no current path for the company to report their Q2 loss (or at the very least a Q-over-Q down revenue) while supporting the current valuation much less a higher one. I will play a long position and cycle through it- but it will be extremely stressful to watch the huge downswings we are in for (imo)
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luvb2b said: ?

i could also express my view this way:

if they had done a vanilla share offering, the stock price would have come down in the short term. shares would most likely be placed with institutions who wanted to be long term owners of the stock but missed it on the way up. the increased valuation would have given it a higher future weighting in any indexes that tesla got added to, as well as increasing the likelihood of index addition due to the larger market cap. some shorts would have covered, but others would have found more shares to short or to stay short. these shorts would have been dragged slowly behind the tesla plow, their blood effectively fertilizing the ground as their bleeding carcasses slid across the soil. since there is no debt left bankruptcy risk is essentially zero.

by doing this carefully structured offering, the long term investors who want a pull back to buy tesla aren't going to be able to get shares. they won't chase as a matter of discipline, so they won't get in. meanwhile more shares will end up in the hands of those hedging the weird call option, and in the hands of hedge funds who are doing stock-loan / convertible bond arbitrage as i described earlier. the short term impact on the stock price will be positive and you will pile drive the shorts out. meanwhile debt increases on the balance sheet so bankruptcy can't be counted out as a worst case scenario. without shorts to support the stock as it drops, the stock will be more volatile (on the way down).

now tell me which would you prefer as a long term owner of the stock? just my opinion. k.i.s.s.
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Do you really think tesla operates with no bankruptcy risk if their balance sheet contains no long term debt?

I think it's silly to look at this debt load as anything approaching relevant in discussing bankruptcy risk. Either the demand is there or it isn't; exploding working capital needs will put Tesla into CH11 whether or not there's a $400 million debt load, if the cars don't sell. Just ask JCPenny

Further, to frame the capitalization question in the context of whether and at what weighting tesla will be included in index funds, or whether the marginal 3 or 4 million shares will be in the hands of traders or bots or long term investors is wholly besides the point IMO. There are already very large insider and long term strategic and financial investors here; an extra 4 million shares in one or another hand matters very little. IMO Tesla's desired capital structure that provides the best trade off between coat of capital and leverage is what matters in these decisions, and that's why we are seeing this structure, at this time.
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Why is Elon buying all his shares at market price, when he can exercise his options at less than $10. All this stuff is way over my head.
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tslas said: ?

Why is Elon buying all his shares at market price, when he can exercise his options at less than $10. All this stuff is way over my head.
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so it sets the price for the remainder of the offering (in a way). The offering already as a guaranteed large buyer at current market. Otherwise the current market price could be a challenge to establish as valid with investors of the offering. That was the reason on the last offering, but the real reason on this one imo is to shaft the shorts, keeping float shares in short supply (but that's just an speculative opinion with no particular basis in fact, knowledge or any other information). He's gambling that he can ramp Tesla fast enough in actual profit to continue using the shorts to drive the stock price - makes it really more risky imo for us small time long players though. Unfortunately for me, I'm a firm believer so will be taking that risk- albeit a smaller one than I planned
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I am operating off of my phone and am not in a position to run this down. So I apologize for fact based mistakes.

It does look like Elon is purchasing ~$100m of the new shares issued. I notice that they are issuing $450m in debt. Going from memory and a quick mental calculation, wouldn't $50m in options exercised @~$9/share would net Elon ~$470m? The debt becomes available after trading tomorrow, so any chance we might see Elon exercise his original options and use the proceeds to purchase the debt?

He previously promised to pay off the loan himself. Would this maneuver even be legal?

Regardless Elon should be getting a new batch of options under his compensation plan for delivering 10k vehicles, which almost certainly happened yesterday or the day before.

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Actually, I forgot the company cars. 10000 might be today or tomorrow.
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Johan said: ?

luvb2b2: Excellent understanding as ususal you we're two steps ahead!
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Indeed! Very savvy and prescient! The real kicker is Elon's huge participation. That almost entirely negates dilution knee-jerk thinking.

With 1/2 billion cash on hand and only well-designed convertible debt, Tesla will be able to pounce like lightning in every direction!

Sent from my iPad using Tapatalk HD
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I also think that Elon will exercise his new options, and use the proceeds to buy the debt and new shares.

So this is like he pays $50m and the shorts pay the rest, and Tesla pays down the DOE loan.

So, when Elon said that HE will pay off the loan himself, he was not quite correct. The shorts will pay off the DOE loan.
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Can't help it: somewhere in a Boston office, or in one of his countless mansions, I do hope Mitt's jaw has just dropped. He knows he never did a deal this good.

Sent from my iPad using Tapatalk HD
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Tesla still ends up with the debt on their books. So Tesla will still pay. That's a wash or a slight negative by itself. But if Elon aquired the debt it would make for interesting drama and also put additional shares on the market.
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CapitalistOppressor said: ?

Tesla still ends up with the debt on their books. So Tesla will still pay. That's a wash or a slight negative by itself. But if Elon aquired the debt it would make for interesting drama and also put additional shares on the market.
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I guess the other advantage is this debt has a lower service requirement until (if) he does. Should help cash flow even if not immediate balance sheet
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luvb2b said: ?

well you gotta hand it to elon. i've never seen a ceo who has it in for shorts so badly. what he's doing is raising money without issuing very many shares. by using convertible debt, the debt can be priced off of the shares, but the shares will never exist til sometime in the future. the shorts won't be able to use the convertible debt to hedge because holding tesla shares short is just too expensive.

and in fact, because the you can earn so much loaning out the shares, you'll find hedge funds may do the reverse arbitrage - that is, they buy tesla shares and short the convertible debt. the idea is the hedgie buys tesla and loans out the shares, earning 30%+ in the short term. the convertible debt is shorted and requires some low interest payment (which doesn't matter much compared to the 30%). and the convertible debt provides a hedge to the long tesla position, protecting against some of the downside. if this trade starts happening, it will skew the price of the convertibles low and push the share price perhaps higher.

i'm trying to understand all this business about hedging the dilution of the convertible:

"The notes will be convertible into cash and, if applicable, shares of Tesla's common stock. The interest rate, conversion price and other terms of the notes are to be determined.In connection with the offering of the notes, Tesla intends to enter into convertible note hedge transactions and warrant transactions which are generally expected to prevent dilution up to 100% over the offering stock price. In connection with establishing their initial hedge of the convertible note hedge and warrant transactions, the hedge counterparties or their affiliates expect to enter into various derivative transactions with respect to our common stock concurrently with or shortly after the pricing of the notes, including with certain investors in the notes."

essentially a hedge against the note conversion would likely be tesla buying some kind of call options (or call spreads as there appears to be a cap). presumably they would exercise these calls as the notes got converted. what i don't understand is what the warrants are for, as warrants would involve newly issued shares being created. i can't really say i understand all this, except that what it does is it forces the counterparty to the conversion hedge to be short some kind of weird call option. presumably that counterparty then hedges the trade by buying shares of tesla (as typically short calls are hedged with long stock).

and then finally you have elon buying $100 million of stock in the offering. this is the dumbest part of the whole announcement. why didn't he buy $100 million when they did the offering at $27 just 6-8 months ago? my guess is that as he did in a prior offering, he is using his goldman line of credit backed by spacex/solar city/tesla. that credit line has surely grown recently, and he's putting $100 million of it to work. but it is actually quite idiotic. he already has his balance sheet at risk backing tesla's buyback guarantee. he already has a margin loan for tesla shares. and he already has a shi1-ton of tesla options. to buy relatively little at $28 and then after a 3x jump in the price he jumps in huge? that would be really poor trade management in nearly all circumstances (there are a few exceptions i can think of).

imo all this makes for great headlines, but unless i am misunderstanding something, elon has lost his mind. the structure of the offering seems to be designed to raise capital and goose tesla stock higher. the capital raise is good but i would argue that at this point it's almost intentional manipulation trying to drive the stock higher. now maybe tesla's sales and earnings are going to be good enough to justify whatever that higher price might be, but honestly i can't understand why they are manipulating the stock this way. the convertible note hedge transactions throw a whole bunch of opacity over the whole thing: what derivative transactions will be entered behind the scenes, who will participate, and how will they affect the shares? these are all unknown to shareholders.

and it seems the result is that more tesla shares will end up in the hands of hedge funds and investment banks who are using them for sophisticated trading strategies related to the hedges and the convertibles. fewer shares will be in the hand of long-term tesla investors. and volatility in the stock price will increase. it has been (and may continue to be) great fun on the way up. but some day it will turn down as sure as the tide eventually goes out. and the drop could be very painful.

oh and by the way, we don't even know how many shorts are left in the stock. nearly 110 million shares traded in the last 5 sessions, so presumably a lot of the old shorts have covered.

i know from a shareholder point of view there is some excitement that he's taking a knife to the back of the short-sellers. the offering is great and an amount similar to what i hoped they would raise. it's awesome they can do it without issuing shares. the "hot money" in tesla is going to love this announcement.

however i feel he is going too far here with some of these additional complexities. i don't believe these complexities serve the long term owners of the company. what i see happening in the future is that after the shorts are pounded to oblivion the cost of shorting will drop. at that time a lot of people who are holding shares to take advantage of loaning them out (like the stooges from the rolling naked short thread) will start to sell those shares. hedgies who are doing the trades described above will not want their shares either. and meanwhile the shorts who would otherwise support the price in a falling market will be gone. with the price artificially inflated, absence of demand from shorts, and plenty of supply from longs unwinding random derivative strategies, i would expect the subsequent drop to be exaggerated as well. i'm not describing a short process here, this is something that would likely play out over a matter of many months. maybe by then elon will have done something to justify a $15 billion fully-diluted valuation, which will happen probably by $110-120/share and things will be completely different than my debbie-downer scenario.

almost every company i've seen go to war with the shorts has ended up having some major declines in share price. i like to see tesla be shareholder friendly, but going too far to murder the shorts is not something i like to see. i think what would have been better is to just keep executing and letting the stock work its way higher naturally, keep the shorts engaged with whatever nonsense gets them to short. those shorts would basically guarantee outperformance of telsa stock in a down market and offer a constant supply of buyers to keep buoying the share price. any increase in share price would have unfolded over a longer period of time, and long term tesla owners would have been more likely to not be flushed out by high volatility.

that's my 2c. happy & sad at the same time. luv to hear other people's opinions.
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I'm struggling to catch up to this on my phone. These convertible notes can be converted to cash or shares. These end up as a "loan" on the books, but is there any payments required? Almost seems like a single balloon payment in 2018 for either cash or shares. If Elon aquired these wouldn't it be like an option that Elon could use to maintain flexibility for himself and Tesla moving forward?

And again, anyone know if this is legal? Goldman is issuing the securities tomorrow. Could they even preferentially hold them for Elon?
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CapitalistOppressor said: ?

I'm struggling to catch up to this on my phone. These convertible notes can be converted to cash or shares. These end up as a "loan" on the books, but is there any payments required? Almost seems like a single balloon payment in 2018 for either cash or shares. If Elon aquired these wouldn't it be like an option that Elon could use to maintain flexibility for himself and Tesla moving forward?

And again, anyone know if this is legal? Goldman is issuing the securities tomorrow. Could they even preferentially hold them for Elon?
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that's the way I read it- pretty smart as it removes that from the cash flow requirement. I'm no expert, but I don't see any reason it wouldn't be legal. Guess this is what he meant by covering the loan himself. Even if the debt/options are held for 2018 Elon it has to carry on the books until then and no different than a personal loan to the company backed by current margin or asset. I've done similar for my startups without a problem- (but again I'm not an authoritative source for this opinion - just based on some personal experience)
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kenliles said: ?

that's the way I read it- pretty smart as it removes that from the cash flow requirement. I'm no expert, but I don't see any reason it wouldn't be legal. Guess this is what he meant by covering the loan himself. Even if the debt/options are held for 2018 Elon it has to carry on the books until then and no different than a personal loan to the company backed by current margin or asset. I've done similar for my startups without a problem- (but again I'm not an authoritative source for this opinion - just based on some personal experience)
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Plus it locks in Elons gains from exercising his options because the securities can be converted to cash.

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Though my expectation would be that Elon would eventually convert to shares and wipe the debt away in a backdoor secondary whenever he feels like it.
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CapitalistOppressor said: ?

Plus it locks in Elons gains from exercising his options because the securities can be converted to cash.
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yep - good point I didn't think of that. Simply gives him portfolio cash position. By 2018 he knows it will be chump change to him anyway (he probably views it as securing his ticket to Mars )

yeah- agree on your second follow up thought. From his words and contract, he's pretty locked in to Tesla for 10 years, so probably just converts to stock- shorts will be all gone by then!
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CapitalistOppressor said: ?

Plus it locks in Elons gains from exercising his options because the securities can be converted to cash.

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Though my expectation would be that Elon would eventually convert to shares and wipe the debt away in a backdoor secondary whenever he feels like it.
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I don't think this is it. Elon is already buying 100M in shares. I find it hard to believe this is what they're going to do. If it was, they could have just sold him the preferred shares in a direct sale the same way they are selling him the normal shares. Why go through the charade?
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gregincal said: ?

I don't think this is it. Elon is already buying 100M in shares. I find it hard to believe this is what they're going to do. If it was, they could have just sold him the preferred shares in a direct sale the same way they are selling him the normal shares. Why go through the charade?
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cuts the dilution this way-
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kenliles said: ?

cuts the dilution this way-
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Yes. To do this Elon will need to exercise a lot of options. Doing it any other way would flood the market with shares.
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ModelS8794 said: ?

Do you really think tesla operates with no bankruptcy risk if their balance sheet contains no long term debt?
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near zero bankruptcy risk, yes.

the primary risk tesla faces is refinancing risk. for example, consider a scenario where a couple years down the road interest rates in the usa are higher, the euro-zone is in chaos, oil prices are lower due to lack of demand, and luxury auto sales are down. in that world tesla could end up in a situation where a debt repayment is due but they don't have adequate funds on hand to make it and the credit markets won't let them refinance. tesla would have to sell a large number of shares to make the payment, or face default.

if they take the debt off their balance sheet, there is no large debt repayment. they can regulate their cash in down cycles by managing labor and capital expenditures to maximize their resources.

we've already seen this happen in tesla's young history. when it came time to raise funds, the capital markets closed on them. tesla nearly didn't make it, saved only by elon committing his last $20 million to the company. who's to say it couldn't happen again? and this time elon would be getting margin calls if tesla shares were going down.

ModelS8794 said: ?

I think it's silly to look at this debt load as anything approaching relevant in discussing bankruptcy risk. Either the demand is there or it isn't; exploding working capital needs will put Tesla into CH11 whether or not there's a $400 million debt load, if the cars don't sell. Just ask JCPenny
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besides execution risk, you're totally ignoring the possibility of external macro events. if rates rise by say 4-5%, you can bet those people using penfed and tesla financing at 1-3% rates will be using it a lot less at 6-8% rates. we already know the demand is there when oil is $95, interest rates are near zero, and government incentives to consumers are at least $7,500 per vehicle. but what if oil is $40, rates are 7%, and government incentive subsidies are gone?

as i said above, the company already faced a liquidity event once when capital couldn't be raised on a timely basis due to market conditions. why keep the door open for that sort of thing again?

ModelS8794 said: ?

Further, to frame the capitalization question in the context of whether and at what weighting tesla will be included in index funds, or whether the marginal 3 or 4 million shares will be in the hands of traders or bots or long term investors is wholly besides the point IMO. There are already very large insider and long term strategic and financial investors here; an extra 4 million shares in one or another hand matters very little. IMO Tesla's desired capital structure that provides the best trade off between coat of capital and leverage is what matters in these decisions, and that's why we are seeing this structure, at this time.
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it's not 3-4 million shares in all scenarios. $830 million would be ~10 million shares. it's the difference between 10 million shares being in the hands of long term investors who are disciplined about what price they pay and 4-6 million shares being in the hands of people who don't care what they pay as long as they can do whatever arbitrage trade. the former helps steady the valuation and the latter makes it more volatile.

i don't see how repaying a low-interest government loan with a convertible bond can really help tesla's cost of capital? is the market really going to loan them money cheaper than the federal government? i guess we'll find out soon enough. i'm not convinced this decision making was optimizing the balance sheet. i think it was a financing designed to raise capital and simultaneously screw the shorts. on those two counts it is brilliantly conceived.

real world liquidity is fleeting and capital markets can close their doors from time to time. having no debt would knock that awkward refinancing risk off the table and i would have liked to have seen it.
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luvb2b said: ?

by doing this carefully structured offering, the long term investors who want a pull back to buy tesla aren't going to be able to get shares. they won't chase as a matter of discipline, so they won't get in.
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luvb2b, you sound frustrated. Hope you didn't get your shares taken away from you.

Sometime the right move is to chase, sometimes its not. I think there's adequate 'cash' on sidelines, to keep TSLA at these levels regardless of whether Elon participates in the raise.
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Just to clarify the point, Elon does NOT have $450m sitting around. He needs to sell like 5m+ shares. He is disallowed from selling his regular shares (or taking additional loans against them) so he has to exercise options.
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"In connection with the offering of the notes, Tesla intends to enter into convertible note hedge transactions and warrant transactions which are generally expected to prevent dilution up to 100% over the offering stock price. In connection with establishing their initial hedge of the convertible note hedge and warrant transactions, the hedge counterparties or their affiliates expect to enter into various derivative transactions with respect to our common stock concurrently with or shortly after the pricing of the notes, including with certain investors in the notes."
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Substitute "Elon Musk" with the bold, and what does this all mean?

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"the hedge counterparties or their affiliates expect to enter into various derivative transactions"
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They can only "expect" something if they already know who will have the notes. They will engage in derivative transactions with Elon.

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Could these transactions be designed to ensure Elon doesn't immediately convert the notes into shares and kill the share price? Thus allowing Goldman et al to ink this deal tonight before it all closes?
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CapitalistOppressor said: ?

Substitute "Elon Musk" with the bold, and what does this all mean?

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They can only "expect" something if they already know who will have the notes. They will engage in derivative transactions with Elon.

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Could these transactions be designed to ensure Elon doesn't immediately convert the notes into shares and kill the share price? Thus allowing Goldman et al to ink this deal tonight before it all closes?
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did I miss an announcement? Why do you think it at all likely that the debt would go to Musk?
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i.e. somebody needs to promise to purchase Elon's options when those are made available. Maybe this is just to ensure everyone knows how the pieces of this all will fit together, regardless of how the market moves.

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ModelS8794 said: ?

did I miss an announcement? Why do you think it at all likely that the debt would go to Musk?
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It's a hypothesis. I am not prepared to say it is "likely". He needs to exercise a ton of options to make it all work.

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Plus it needs to all be pre-arranged. We don't have evidence of that yet.

Unless the language used in the announcement is itself evidence, which is what I am trying to nail down. Feel free to debate the point.
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CapitalistOppressor said: ?

Substitute "Elon Musk" with the bold, and what does this all mean?

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They can only "expect" something if they already know who will have the notes. They will engage in derivative transactions with Elon.

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Could these transactions be designed to ensure Elon doesn't immediately convert the notes into shares and kill the share price? Thus allowing Goldman et al to ink this deal tonight before it all closes?
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nice catch- that lines up for my thinking. Let's him control the value and mechanism for the hedge. slick willie.
I'll bet this entire arrangement was pre conceived back when the shorts were 'in charge'- only the timing was in undetermined. I'd also be willing to bet there are ways Elon could come out a lot better but he's fulfilling his life's passion. His version of Jobs $1/yr etc. and putting his $ where his mouth is. He certainly won't be hurting- but this fits his pattern of commitment.

On a personal level I feel some of Luv frustration. I think it's going to add volatility to an already volatile stock.
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CapitalistOppressor said: ?

i.e. somebody needs to promise to purchase Elon's options when those are made available. Maybe this is just to ensure everyone knows how the pieces of this all will fit together, regardless of how the market moves.

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It's a hypothesis. I am not prepared to say it is "likely". He needs to exercise a ton of options to make it all work.

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Plus it needs to all be pre-arranged. We don't have evidence of that yet.

Unless the language used in the announcement is itself evidence, which is what I am trying to nail down. Feel free to debate the point.
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It just really seems like a lot of odd conspiracy theorizing to me, both this line as well as the purported rationale for this structure elucidated elsewhere in this thread. I mean, sometimes a cigar is just a cigar.

The market is more than adequate to bear the debt offering. Musk is an entrepreneur and equity investor, always has been in all his endeavors. It just makes no sense to me that he'd have any interest adding exposure to tesla in any other form than equity.
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CapitalistOppressor said: ?

i.e. somebody needs to promise to purchase Elon's options when those are made available. Maybe this is just to ensure everyone knows how the pieces of this all will fit together, regardless of how the market moves.

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It's a hypothesis. I am not prepared to say it is "likely". He needs to exercise a ton of options to make it all work.

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Plus it needs to all be pre-arranged. We don't have evidence of that yet.

Unless the language used in the announcement is itself evidence, which is what I am trying to nail down. Feel free to debate the point.
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I just find it unlikely, and possibly illegal (it certainly seems designed to mislead shareholders about dilution, which would be suspicious).

Edit: I guess I'm just more inclined to believe it's going to happen the way they described in their press release. I'm not sure I've ever seen a financial press release like this be so misleading in the way you guys are suggesting.
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The New York Times issues some FUD about today's financing announcement.

http://dealbook.nytimes.com/2013/05/15/tesla-motors-bid-for-cash-may-also-fuel-critics/
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all is good.

I finally understand how TSLA's previous offerings tend to put a huge support at the offering price, which is usually counter to what a dilutive offering do to a stock. It's because of Elon's own participation in the offering.

IMO, and I think Elon is thinking about the same thing. TSLA still will not be able to survive if Gen III is not successful. Hence the timing of the convertibility of of the notes after the predicted gen3 mass production. By then, dilution doesn't matter either way. If gen 3 fails, the company fails anyway, if gen 3 wins. Dilution will have very little effect on the stock price.

I applaud the offering to get rid of debt. As a holder of BAC stocks who kept in touch with all the lawsuits, any type of government involvement is the biggest no no. The government doesn't care about contracts or whether or not the debt is junior or senior. They are going to tell you what to do and if you don't do it, they simply change the law. It is worth it to do a private offering of a 10% debt in order to get rid of a government loan at 1%. How much of TSLA's market cap did Mitt's one offhand remark wipe out? How much more time did Elon spend rescuing the share price from that nightmare? The worst case scenario is for politicians to start using TSLA as a punching bag in order to gain votes. Suing for no reason just because they can.

I was trying to think up some good way of gaining long term investors, I think the warrant and note offering is actually a great way to do that.
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ModelS8794 said: ?

It just really seems like a lot of odd conspiracy theorizing to me, both this line as well as the purported rationale for this structure elucidated elsewhere in this thread. I mean, sometimes a cigar is just a cigar.

The market is more than adequate to bear the debt offering. Musk is an entrepreneur and equity investor, always has been in all his endeavors. It just makes no sense to me that he'd have any interest adding exposure to tesla in any other form than equity.
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Not arguing that this is going to happen the way I described. But why would Elon want to put Tesla into the position of having to pony up cash on demand, or suffer stock dilution without being totally in charge of choosing which or how this happens?

For him, it locks in the cash value of the options he exercises to do this, and also gives him equity in Tesla without immediate further dilution.

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gregincal said: ?

I just find it unlikely, and possibly illegal (it certainly seems designed to mislead shareholders about dilution, which would be suspicious).

Edit: I guess I'm just more inclined to believe it's going to happen the way they described in their press release. I'm not sure I've ever seen a financial press release like this be so misleading in the way you guys are suggesting.
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I don't really see anything misleading about it. Though I am on board with the "possibly illegal" part or other possible reasons why this can't possibly happen. This stuff is way above my pay grade.
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BTW it looks like Musk is covered on loans for this $100 million purchase AND his upcoming option exercise.

Goldman Sachs Bank USA, an affiliate of Goldman, Sachs & Co., has made extensions of credit in the aggregate amount of $125 million to Elon Musk and the Elon Musk Revocable Trust dated July 22, 2003, or the Trust, a portion of the proceeds of which Mr. Musk used to purchase our common stock. Goldman Sachs Bank USA has agreed to make additional extensions of credit in an aggregate amount of $150 million to Elon Musk and the Trust, which together with the currently outstanding $125 million would total $275 million. Mr. Musk will pay the purchase price for up to 540,605 shares of common stock he has indicated a preliminary interest in purchasing in our concurrent common stock offering and the 660,740 shares of our common stock being purchased in a subsequent private placement with a portion of the proceeds of these additional extensions of credit to be made by Goldman Sachs Bank USA. Interest on these loans accrue at market rates. Goldman Sachs Bank USA received and will receive customary fees and expense reimbursements in connection with these loans. As a regulated entity, Goldman Sachs Bank USA makes decisions regarding making and managing its loans independent of Goldman, Sachs & Co. In addition, Morgan Stanley Smith Barney LLC, an affiliate of Morgan Stanley & Co. LLC, has made a loan to Mr. Musk in the aggregate amount of $25 million. Interest on this loan accrues at market rates. Morgan Stanley Smith Barney LLC received and may receive customary fees and expense reimbursements in connection with this loan.
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At least some of the notes are going to the underwriters -

In addition, Tesla has granted the underwriters a 30-day option to purchase up to an additional 405,454 shares of common stock and $67.5 million in aggregate principal amount of the notes.
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CapitalistOppressor said: ?

At least some of the notes are going to the underwriters -
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Everything goes to the underwriters, that's how an offering works. The underwriters buy from the company, and sell on into the market.
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ModelS8794 said: ?

BTW it looks like Musk is covered on loans for this $100 million purchase AND his upcoming option exercise.
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So Elon just took out $150m loan, with $100m accounted for and $50m needed to exercise his options. When do we need to be notified of him exercising his options?
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My own Dear Elon letter:

Please put up a page so I can reserve a Gen 3.
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I'm struggling to keep up with the concerns here. If it walks like a duck, looks like a duck and quacks, its probably a duck.

Convertible debt is a very, very useful financing instrument for the issuer and holder alike. Very common.

For TSLA, they get hundreds of millions at lower interest rate vs. straight debt and without a dilutive share issuance. The convert price will likely be much higher (20-30%) than current share price (leading to less dilution) and depending on the covenants, may only be convertible under certain scenarios. A warrant issuance at the same time is typically used to sweeten the deal, especially if there are restrictions on convertibility.

For example, here is a homebuilder who also announced a convertible offering today. Take a look. The interest rate is 0.25% (basically free!!) with the convertible excise set at $75 (current share price is $50). The homebuilder just raised a ton of non-dilutive, non-voting capital and the holder gets a call option. There is probably a warrant attached to make this somewhat more interesting in the near term for the debt holder.
Homebuilder Ryland Group Sells $250 Million of Convertible Debt - Bloomberg
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GenIIIBuyer said: ?

luvb2b, you sound frustrated. Hope you didn't get your shares taken away from you.
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oh heck yeah i'm frustrated. the electrician was supposed to come do the wiring for my baby 3 days ago and he still hasn't shown up. so i gotta drive around a crappy ice while i wait.
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Is the secondary offering and DOE loan payoff a precursor to the Seeking Alpha article "Beauty Contest" in this article by Tufenk?: http://seekingalpha.com/article/1408291-tesla-s-mirror-mirror-on-the-wall-stock-can-fly-until-july

In the article, he discusses how the exclusive intellectual property agreement with Daimler lapses in July of this year. I'm not sure how this integrates with paying of the DOE loan and potentially courting suitors for a strategic partner a) within the auto industry - Daimler or Toyota or b)outside the industry, but inside Silicon Valley. My gut tells me b) as I don't think TESLA wants anything to do with the baggage of partnering with an ICE legacy producer. With all the cash splashing around corporate balance sheets (and stuck overseas, in some cases) at 0% interest, why wouldn't TESLA partner with a technology firm (Google, Apple, etc.) to use capital in Europe/Asia to more rapidly build out the European/Asian supercharger network and possibly ramp up production?
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Causalien said: ?

My own Dear Elon letter:

Please put up a page so I can reserve a Gen 3.
Click to expand...

I second this motion. Let me give you my $$$$!
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30seconds said: ?

I'm struggling to keep up with the concerns here. If it walks like a duck, looks like a duck and quacks, its probably a duck.
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am i the only one that sees tesla piling leverage on leverage? the share price is giving them a chance to delever and they're going the other way. i suppose the most logical explanation is they know a lot more than i do (obviously).

for examples:

1. they guarantee the value of the model s with their own balance sheet, essentially levering the impact of any model s underperformance or decline in resale value. imagine for example an economic slowdown where rates rise, luxury car sales decline, oil prices drop, and financing becomes far less affordable. that model s resale value will likely end up being lower than they expected and will be a negative lever just as today it is a positive lever to increase sales.

2. they pay off the doe loan, but borrow even more via a convertible senior offering. in the short run it's a positive lever because they avoid issuing shares and because hedgies can do the reverse-convertible arbitrage i described earlier (buy shares, loan them out, and delta hedge by shorting the convertible). in the long run the note offering leaves them with even more debt than before. once the shorts have been obliterated and the cost of shorting declines you get selling pressure in your shares from people who are unwinding their arb trades or doing standard convertible arbitrage, and if ever their ability to repay or refinance gets called into question you'll see pressure from credit default swap hedging too. in a down cycle this financing is a negative lever - surely you must remember how many companies have had stocks trashed by cds and convertible-arb hedging?

3. they add in this call option/warrant structure which gives the short term share price an even bigger romp due to some inevitable delta hedging of the call options. but the dynamic hedging of a sizable call position increases stock volatility, magnifying the effect of any upside or downside catalysts.

4. elon borrows against the company stock to buy shares at 3x the price where he could have bought them just 6-8 months ago. what's the total value of his line of credit at goldman now? do you guys remember stocks like chk, gmcr, etc. where the owners levered themselves to the company's share price on margin? the downside volatility was exaggerated. in elon's case goldman knows he's not liquid, so once the shares get down far enough they have some incentive to try to shoot against him. and margin calls are based on the company's stock price, not its fundamentals. green mountain coffee is a perfect recent example. elon is already levered to tesla downside because he's committed to buy the model s's if tesla can't perform on its guarantee.

my view is the share price is high enough to allow them to de-lever. raising capital by issuing shares and paying down the doe loan would have:

a. reduced balance sheet leverage vs current structure.
b. reduced share price volatility vs current structure.
c. eliminated liquidity & refinancing risk vs current structure.
d. the effects of a,b, & c would reduce the chances of elon getting a margin call in the future vs current structure.

i think i'm just repeating myself at this point so probably time to shut up.

the financing will be a wonderful short term boost to the stock price, and my concerns about the long term ramifications remain.
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luvb2b said: ?

am i the only one that sees tesla piling leverage on leverage? the share price is giving them a chance to delever and they're going the other way. i suppose the most logical explanation is they know a lot more than i do (obviously).

for examples:

1. they guarantee the value of the model s with their own balance sheet, essentially levering the impact of any model s underperformance or decline in resale value. imagine for example an economic slowdown where rates rise, luxury car sales decline, oil prices drop, and financing becomes far less affordable. that model s resale value will likely end up being lower than they expected and will be a negative lever just as today it is a positive lever to increase sales.

2. they pay off the doe loan, but borrow even more via a convertible senior offering. in the short run it's a positive lever because they avoid issuing shares and because hedgies can do the reverse-convertible arbitrage i described earlier (buy shares, loan them out, and delta hedge by shorting the convertible). in the long run the note offering leaves them with even more debt than before. once the shorts have been obliterated and the cost of shorting declines you get selling pressure in your shares from people who are unwinding their arb trades or doing standard convertible arbitrage, and if ever their ability to repay or refinance gets called into question you'll see pressure from credit default swap hedging too. in a down cycle this financing is a negative lever - surely you must remember how many companies have had stocks trashed by cds and convertible-arb hedging?

3. they add in this call option/warrant structure which gives the short term share price an even bigger romp due to some inevitable delta hedging of the call options. but the dynamic hedging of a sizable call position increases stock volatility, magnifying the effect of any upside or downside catalysts.

4. elon borrows against the company stock to buy shares at 3x the price where he could have bought them just 6-8 months ago. what's the total value of his line of credit at goldman now? do you guys remember stocks like chk, gmcr, etc. where the owners levered themselves to the company's share price on margin? the downside volatility was exaggerated. in elon's case goldman knows he's not liquid, so once the shares get down far enough they have some incentive to try to shoot against him. and margin calls are based on the company's stock price, not its fundamentals. green mountain coffee is a perfect recent example. elon is already levered to tesla downside because he's committed to buy the model s's if tesla can't perform on its guarantee.

my view is the share price is high enough to allow them to de-lever. raising capital by issuing shares and paying down the doe loan would have:

a. reduced balance sheet leverage vs current structure.
b. reduced share price volatility vs current structure.
c. eliminated liquidity & refinancing risk vs current structure.
d. the effects of a,b, & c would reduce the chances of elon getting a margin call in the future vs current structure.

i think i'm just repeating myself at this point so probably time to shut up.

the financing will be a wonderful short term boost to the stock price, and my concerns about the long term ramifications remain.
Click to expand...

There is a major long term impact people have not really though about yet. As it was before this offering, Tesla was going to be making payments on the loan for the next 5 year. This would chew up a large part of their revenue at a time when their only product is a relatively low volume Gen 2 platform (Model S and Model X). The way that this offering has been structured essentially pushes the burden of payment down the road past the launch of Gen III. With the exponentially higher volume of Gen III, the per car repayment burden will be less, and thus, the margins, across the board, will be higher. This move allows for the margins on Model S and X to be where they need to be for the company to thrive, for the company to have the cashflow to bring Gen III to market, and sets the stage for a truly high volume Gen III that be able to not only pay back this debt, but will make Tesla the major player in the auto industry on par with all of the other major manufactures. Since the moment Tesla was founded, Gen III was the ultimate goal. While all of the other car manufactures where playing checkers, Elon has been playing chess, and with this offering, he just assured that Gen III will make it to market, and called checkmate.
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Off topic, but man the NYT is acting petulant towards Tesla in the post-Broder era.

brianstorms said: ?

The New York Times issues some FUD about today's financing announcement.

http://dealbook.nytimes.com/2013/05/15/tesla-motors-bid-for-cash-may-also-fuel-critics/
Click to expand...

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luvb2b said: ?

4. elon borrows against the company stock to buy shares at 3x the price where he could have bought them just 6-8 months ago. what's the total value of his line of credit at goldman now? do you guys remember stocks like chk, gmcr, etc. where the owners levered themselves to the company's share price on margin? the downside volatility was exaggerated. in elon's case goldman knows he's not liquid, so once the shares get down far enough they have some incentive to try to shoot against him. and margin calls are based on the company's stock price, not its fundamentals. green mountain coffee is a perfect recent example. elon is already levered to tesla downside because he's committed to buy the model s's if tesla can't perform on its guarantee.
Click to expand...

Here's how I look at Elon Musk purchasing more shares now at 3x price compared to 6-8 months ago. Back then, if Elon could have borrowed more money then he would have and he would have purchased more TSLA stock. However at that time, SolarCity and SpaceX were private and his TSLA holdings weren't worth a ton (compared to now). He already had a sizable loan/line with Goldman Sachs and they weren't going to extend it much further for him to buy a ton of shares.

Fast forward to now, SCTY has IPO'd and his TSLA holdings are worth a lot more, so now Goldman (and others) are able to lend him more money. In Elon's view, Telsa is a steal to get under $100/share (when looking at the long-term perspective), thus he borrows as much as he can and buys as much common stock as he can. Smart move.

Also, I think you're assuming his loan to buy more TSLA shares is completely leveraged from his current TSLA shares. But he's also got SCTY holdings and private SpaceX holdings which are worth a lot more than a year ago. This is just to say even if TSLA goes lower, I don't think he'll be subject to a margin call. He's just got too many assets right now. It's in the best interest of the banks to just keep lending him money and work with him than to work against him.

Overall, I think there's no foolishness in him buying $100m more shares at today's stock price (compared to 6-8 months ago). Just wisdom.
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Martini said: ?

Off topic, but man the NYT is acting petulant towards Tesla in the post-Broder era.
Click to expand...

That's why I'm hoping the last announcement/demonstration turns out to be a frunk battery that can charge up the main pack and extend range. I'd love for him to say something like "ever since the NYT incident, Tesla has been hard at work to make sure that can not happen again. We don't want to see idiots having to tow their Teslas because they ran them out of power. (Yeah, I hope he uses the word idiots):grin:
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DaveT said: ?

Here's how I look at Elon Musk purchasing more shares now at 3x price compared to 6-8 months ago. Back then, if Elon could have borrowed more money then he would have and he would have purchased more TSLA stock. However at that time, SolarCity and SpaceX were private and his TSLA holdings weren't worth a ton (compared to now). He already had a sizable loan/line with Goldman Sachs and they weren't going to extend it much further for him to buy a ton of shares.

Fast forward to now, SCTY has IPO'd and his TSLA holdings are worth a lot more, so now Goldman (and others) are able to lend him more money. In Elon's view, Telsa is a steal to get under $100/share (when looking at the long-term perspective), thus he borrows as much as he can and buys as much common stock as he can. Smart move.

Also, I think you're assuming his loan to buy more TSLA shares is completely leveraged from his current TSLA shares. But he's also got SCTY holdings and private SpaceX holdings which are worth a lot more than a year ago. This is just to say even if TSLA goes lower, I don't think he'll be subject to a margin call. He's just got too many assets right now. It's in the best interest of the banks to just keep lending him money and work with him than to work against him.

Overall, I think there's no foolishness in him buying $100m more shares at today's stock price (compared to 6-8 months ago). Just wisdom.
Click to expand...

I disagree. SpaceX, SCTY, and TSLA are ALL still very much risky startups. SCTY is involved in a government investigation where the feds are checking to see if SCTY has been inflating their installation costs to receive higher subsidies. And SCTY has sued the feds alleging they haven't been paid enough subsidies. Subsidies are at the heart of SCTY's revenue stream and this could end very badly indeed for SCTY. SpaceX is a couple of explosions away from disaster. Remember that their first three rockets blew up or aborted. Their dragon capsule came within a hair's width of being abandoned when the final stage engines didn't startup. Turned out four of the five engines had one part made slightly differently than the one that worked. Tell me for sure that isn't going to happen again. And geez, Tesla's Model S cars have only been on the road in large numbers for the last 4 months. Tell me what happens when they get hit by a class action lawsuits alleging whatever, or their battery pack starts degrading a lot more quickly than anticipated (remember the Model S battery is different than the Roadster battery).

PROBABLY none of these things will happen. But the same logic that makes it a good idea for Tesla to bank $800M when times are good, also makes it a bad idea for Elon to do the exact opposite with his personal finances. At this point Goldman is sitting pretty - they'll make money if his investments do well, and effectively own large chunks of SCTY, TSLA and SpaceX if things go south.

Having said all this, it is very possible that Elon doesn't give a crap about this at all. Preserving $1B for his heirs is probably something he cares very little about. Making an extra $5B so that he can personally fund the first mars colony IS something he cares about. So, consistent with his past actions, he's going all in, cranking up the personal leverage and heading for mars...

- - - Updated - - -

A friend of mine who is a lot more knowledgeable than me breaks down the announcement like this:

"1. Tesla is issuing convertible debt which can be converted into common stock at a TBD price.

2. To prevent that dilution upon conversion of the debt, Tesla is entering into a hedge transaction (utilizing options and warrants most likely done by Goldman). These will be what is called European style settlement meaning they are not using listed options but structures specifically designed for the company and lasting until the obligation on the convertible is eliminated. Effectively, this will give the company the ability to pull shares from the open market at a specified price and turn around and give those shares to the convertible holders as they exercise (preventing the issuing of new shares and diluting).

3. To prevent the counterparty (Goldman) from having a capital exposure being the other side of Tesla�s hedge, counterparty (Goldman) will create a series of transactions to prevent their capital from being exposed � So they will most likely buy the shares they could be obligated to deliver and then collar it (buy puts and sell calls) so that their capital is secured within a certain margin.

The only specific item Lub2b mentions that I don�t fully agree with is the idea that a hedge fund would do a reverse arbitrage with the convertible debt. Because the beta of convertible debt is too low when calculated with the common, that strategy would only work in the event of something strategic associated with the company. The hedge fund would be very much exposed to stock price movements associated with market forces that are not specific to Tesla. "
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I though Musk was buying more because he must maintain a certain % ownership of Tesla? Same goes for all the previous rounds, he bought more to maintain his ownership percentage. Am I wrong?
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Cosmacelf said: ?

The only specific item Lub2b mentions that I don�t fully agree with is the idea that a hedge fund would do a reverse arbitrage with the convertible debt. Because the beta of convertible debt is too low when calculated with the common, that strategy would only work in the event of something strategic associated with the company. The hedge fund would be very much exposed to stock price movements associated with market forces that are not specific to Tesla. "
Click to expand...

we don't know the terms yet, but in my statement i was thinking the convertible debt is actually issued at a near the money strike. the "synthetic convertible" they are creating is effectively at a higher strike as you discussed, due to the call options and warrants.

also today i am noticing the cost to borrow shares is down to 25%, reducing the potential of this trade.
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clmason said: ?

I though Musk was buying more because he must maintain a certain % ownership of Tesla? Same goes for all the previous rounds, he bought more to maintain his ownership percentage. Am I wrong?
Click to expand...

His buy now is a lot larger than it would have to be to just maintain his ownership. He increases his share of ownership.
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luvb2b said: ?

we don't know the terms yet, but in my statement i was thinking the convertible debt is actually issued at a near the money strike. the "synthetic convertible" they are creating is effectively at a higher strike as you discussed, due to the call options and warrants.

also today i am noticing the cost to borrow shares is down to 25%, reducing the potential of this trade.
Click to expand...

By "near the money strike" did you mean near in the money value at time of issue? ie. if share price is $90, the conversion price would be, like $100? I don't think this will be the case, more like $150 conversion price...
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Ah, there we go: http://www.reuters.com/article/2013/05/16/idUSL2N0DX1SY20130516?type=companyNews&feedType=RSS&feedName=companyNews&rpc=43

Premium will be 35%, so if stock is trading at $90, conversion price will be $121.50
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Cosmacelf said: ?

By "near the money strike" did you mean near in the money value at time of issue? ie. if share price is $90, the conversion price would be, like $100? I don't think this will be the case, more like $150 conversion price...
Click to expand...

wow i really thought they would have to closer to the money to get this done. but yeah the news is circulating it's gonna be a 30-35% premium which would be around $120-125 price range.
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Correct me if I'm wrong, but doesn't removing the DOE loan allow Tesla to build cars out of the country? Could they begin making European cars in Tilburg? Imagine how much that would improve production. South Korea and China would look awful tempting as well
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luvb2b said: ?

wow i really thought they would have to closer to the money to get this done. but yeah the news is circulating it's gonna be a 30-35% premium which would be around $120-125 price range.
Click to expand...

the last I picked up was they locked on the 35% and brought the interest down to 1.5-2.0% - must be getting good bid response
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Martini said: ?

Off topic, but man the NYT is acting petulant towards Tesla in the post-Broder era.
Click to expand...

I think the world has learned that even if you still trust the NYT, only an idiot would trust them to be objective regarding Tesla. In fact, so much so that I think the Top Gear "entertainment" legal argument applies to anything they say about Tesla going forward.

A very sad reality about the NYT indeed.
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I completely agree. Suffering a bit of a loss of innocence today.

brianman said: ?

I think the world has learned that even if you still trust the NYT, only an idiot would trust them to be objective regarding Tesla. In fact, so much so that I think the Top Gear "entertainment" legal argument applies to anything they say about Tesla going forward.

A very sad reality about the NYT indeed.
Click to expand...

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i complained about tesla using debt to raise capital, but man, i can't help but be impressed by what they've pulled off here.

$1 billion in capital raised, after paying the doe loan probably leaves them with $750 million in cash in the bank. that would cover more than 2 years of cash burn at their current expense level. considering they will sell out this year, elon has just guaranteed their survival through at least 2015 in the most dire economic circumstances. and assuming even moderately bad economic circumstances tesla will have enough capital to proceed with model x and gen 3 development.

also seeing the demand for the debt at such low yields, i am reversing course. great job elon, i completely underestimated the lunacy of the fixed income markets today.

the people buying these bonds are just morons imo, as 1.5% in no way adequately reflects the true credit risk for tesla. i had no idea they could get this paper sold for such low yields, and especially with the conversion price so far above today's close. although i don't like the balance sheet risk from the debt, from tesla's point of view the trade is so juicy with yields so low and conversion factors so high... how could elon not do this?

it still feels a bit backwards to me for the company to sell so many shares at $28 and then so few at $92. and it feels ridiculous that elon bought $1m at $28 and is buying $100m at $92. those things feel quite wrong from a trader's point of view.

anyway great job elon. you've got the capital you need to pursue the programs you want and the world now knows that tesla is a name we will still be discussing 3 years from now. as a side jab to the john petersons of the world, they can't say that about exide and axion power, can they! :biggrin:

the future awaits!
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I am finally picking up another 300 shares I should have picked up months ago .... done waiting for an entry point lol. !! The future is an exciting place .
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i found the reward/risk ratio at these prices a bit unfavorable for my taste.
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luvb2b said: ?

i found the reward/risk ratio at these prices a bit unfavorable for my taste.
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Sadly I agree, sold all my contracts in the mid 70s and have been waiting ever since. I think getting on the bandwagon at 90 is just way too high in terms of risk/reward. I'll bite the bullet closer to 80 I think.
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luvb2b said: ?

the people buying these bonds are just morons imo, as 1.5% in no way adequately reflects the true credit risk for tesla. i had no idea they could get this paper sold for such low yields, and especially with the conversion price so far above today's close.
Click to expand...

Working from a rough estimate of what the embedded option is worth (~55-65 million on $600 million principal or 9-11%) the convert buyers are effectively taking on the senior debt credit risk at 3.5-4% YTM or a 270-320bp spread to 5-yr treasury.
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luvb2b said: ?

i complained about tesla using debt to raise capital, but man, i can't help but be impressed by what they've pulled off here.

$1 billion in capital raised, after paying the doe loan probably leaves them with $750 million in cash in the bank. that would cover more than 2 years of cash burn at their current expense level. considering they will sell out this year, elon has just guaranteed their survival through at least 2015 in the most dire economic circumstances. and assuming even moderately bad economic circumstances tesla will have enough capital to proceed with model x and gen 3 development.

also seeing the demand for the debt at such low yields, i am reversing course. great job elon, i completely underestimated the lunacy of the fixed income markets today.

the people buying these bonds are just morons imo, as 1.5% in no way adequately reflects the true credit risk for tesla. i had no idea they could get this paper sold for such low yields, and especially with the conversion price so far above today's close. although i don't like the balance sheet risk from the debt, from tesla's point of view the trade is so juicy with yields so low and conversion factors so high... how could elon not do this?

it still feels a bit backwards to me for the company to sell so many shares at $28 and then so few at $92. and it feels ridiculous that elon bought $1m at $28 and is buying $100m at $92. those things feel quite wrong from a trader's point of view.

anyway great job elon. you've got the capital you need to pursue the programs you want and the world now knows that tesla is a name we will still be discussing 3 years from now. as a side jab to the john petersons of the world, they can't say that about exide and axion power, can they! :biggrin:

the future awaits!
Click to expand...

Elon didn't have much in the way of cash flow when they made the offering at $28 and once the stock hit $92, his letter of credit with Goldman grew exponentially Elon prevented himself from being diluted further since he wants to CONTROL the company for quite a while longer.
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http://www.4-traders.com/TESLA-MOTORS-INC-6344549/news/Tesla-Motors-Inc-Tesla-s-Convertible-Note-Sale-Upsized-to-$600-Million-16869927/
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teslamotorclub

Thứ Ba, 3 tháng 1, 2017

Dear Elon: How about a capital raise to pay down the DOE loan? part 1

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