Is this the tweet of a divorce ? Elon Musk, CEO of Tesla, has put himself in a quagmire after he claimed on Twitter to have the necessary funding for a possible withdrawal of the Grant of the manufacturer of premium electric vehicles.
But where is the money? The question on everyone’s lips in the financial sector american, earned by the skepticism despite the aura enjoyed by Elon Musk, who founded Tesla in 2003 to transform the car into a technological jewel and eco-friendly.
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on Tuesday, the contractor has tweeted “secure funding” but has still not demonstrated that he already had the funds to complete the transaction, the cost of which could amount to at least $ 50 billion if it kept its 20% interest.
The classic way to remove a company’s rating is a LBO (leverage buy out), that is to say that an external company or of the investment fund redeem all of the outstanding shares with borrowed money, most often from banks or investors with full pockets.
None of the six big u.s. banks has pledged billions of dollars to Elon Musk, they have discovered the project on Twitter on Tuesday. “We were not aware of and we have not been contacted,” says the AFP under cover of anonymity, a banker.
It is unlikely that a establishment of Wall Street take the risk to lend its support to Tesla, that burns a billion dollars approximately per quarter and has never been profitable on a full year basis in fifteen years of existence, ” says another banker.
Investigation of the gendarme of the stock exchange
The interest rate of a debt contracted last year by Tesla, according to this last source, reaches high levels, which is a financial burden additional to a company that only had $ 2.24 billion worth of cash at the end of June.
Any potential creditor must also ask the question of how Tesla, once out of the radar of the markets, will fund its operations in the event of a problem with its suppliers, explain the two bankers.
The SEC watchdog, the securities and Exchange u.s., has opened an investigation, and specifically asked Tesla if the statement of Elon Musk was “real”.
An act of 1934 the SEC prohibits business leaders to make announcements on purchases or sales of assets if they do not have the intention to do so nor the means of their ambitions, because that would amount to a manipulation of the stock price.
Tesla made the object of attack of speculators who had bet on the collapse of the company and have therefore lost more than $ 4.4 billion since January following the bond Exchange of securities in the group automobile, according to the calculations of the firm S3 Partners. Two speculators have also assigned the manufacturer and its founder in court Friday.
“Dear SEC, this is easy : ask Tesla to show the agreement or agreements signed(s) with the parties providing the funds, ( … ), which prove that the funding is ‘secured’ and ‘certain'”, wrote on Twitter Thomas Farley, the former boss of the NYSE, the operator stock exchange New York Stock Exchange. “If none of the financial details of evidence does emerge,” analyst Toni Sacconaghi at Bernstein, the debate on “the credibility of Musk” will intensify and that “the volatility of the share price”.
Exit the exchange on the sly ?
“maybe (Elon Musk) has-t-he of the investors who support it and may be it is certain that they will do everything to find the funds,” says Nicholas Colas, co-founder of DataTrek Research. Elon Musk, who dreams of sending tourists to the Moon and link in a record time of major cities by trains and futuristic, is well respected in the Silicon Valley where he could solicit venture capital funds (venture capital).
The contractor, who is recognized as one of the innovators in the forefront of the United States, may also knock on the door from sovereign wealth funds like that of saudi Arabia, who comes to take between 3% and 5% of the share capital of Tesla.
The bankers from JPMorgan Chase, Goldman Sachs, Morgan Stanley and Citigroup think in addition to a variety of financial arrangements. One of the schemes relates to a transaction that would significantly reduce the number of shareholders by convincing small shareholders to sell their shares. There would be more floating capital, which would lead to the removal by stealth of Tesla’s Stock even if the stock would continue to trade on the otc markets.
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The cost of such an operation, consider the sources, it would be understood that between 10 and 20 billion dollars, a weight that is more sustainable.