Tesla raises $1.2 billion in slightly enlarged stock, debt deal

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19 March, 2017

On March 16, a user on the Tesla Subreddit revealed that Elon Musk and other company officials were holding a conference call with the investors directly involved in the sale of shares and bonds.

In addition to an increase in the common stock offering, Tesla also raised $850M from a convertible debt sale with an additional $127.5M available to the underwriters.

Tesla Inc said it expects to raise about $1.15 billion from a stock and senior notes offering, an infusion of needed capital as the electric auto maker enters pre-production of its upcoming Model 3 electric sedan.

Goldman, Sachs & Co., Deutsche Bank Securities, Citigroup and Morgan Stanley are acting as lead joint book-running managers for the offering, with Barclays, BofA Merrill Lynch and Credit Suisse acting as additional book-running managers.

The convertible notes due 2022 ended up pricing at a 2.375% coupon rate, with an aggregate principal amount of $850 million, up from the prior expectation of $750 million. The Model 3, scheduled to start production in July, will start at about $35,000 before incentives and is smaller than the Model S. Tesla plans to accelerate expansion of the Supercharger network this year, starting with doubling its number of North American Supercharger locations in 2017, the company said in its quarterly earnings shareholder letter in February.

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Tesla Inc has raised a total of $1.2 billion in fresh capital by selling common shares and convertible notes, with the sum exceeding its target from earlier this week to raise $1 billion.

With hundreds of thousands of reservation holders still waiting in line for a Model 3, which is slated to enter production later this year, Tesla will face unprecedented levels of demand for its product, which means it'll need to think outside the box to ensure there aren't big ol' backlogs at every step.

The new offering will be participated by Tesla founder and CEO Elon Musk himself.

"This is really a question of what's the risk tolerance of the company, or how close to the edge do we want to go", Musk said.

It seems Tesla will stick to that plan for these last Model S 60kWh vehicles to be sold, giving users the chance to "upgrade" to a 75kWh version down the road.


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