Tesla board mulls de-listing plan

Tesla board mulls de-listing plan

Tesla board mulls de-listing plan

U.S. regulators are examining how Tesla chief executive Elon Musk announced his plan to take the electric carmaker private and whether his statement was truthful, the Wall Street Journal reported.

"I suspect the corporate lawyers are scrambling right now and hoping the SEC doesn't go after him and the company, because it could be viewed as a statement from Tesla", Peter Henning, a professor at Wayne State University Law School specializing in securities law, explained to the Detroit Free Press regarding Musk's tweet on Tuesday. The board on Wednesday.

Mr. Musk on Tuesday proposed taking Tesla private at $420 a share, about 11% higher than the day's closing stock price.

Musk laid out his reasoning for going private in an email to Tesla employees yesterday, which was subsequently posted on Tesla's website.

Elon Musk has faced a barrage of criticism recently and his electric auto company Tesla has been taking a pounding from critics.

Two of the potential stumbling blocks to Musk's plan include the stock price premium not being enough to get the existing shareholders on board to support the sale and coming up short on the announced funding to complete the transition.

In a Wednesday research note, Morgan Stanley analyst Adam Jonas estimated Tesla will end up taking on about US$50b in additional debt if the company goes private.

Tesla is now valued at $63.8 billion.

The deal would be the biggest leveraged buyout of all time, beating the $45 billion record set by Texas power utility Energy Future Holdings.

Those who believe Musk is carrying out a vendetta against short sellers may point to a May 4 tweet suggesting he might have something up his sleeve.

"Earlier today, I announced that I'm considering taking Tesla private at a price of $420/share".

Buying Tesla in its entirety would cost US$72b, based on the company's outstanding stock as of July 27.

"They're being bombarded with questions that we don't think are as relevant to the long-term value of the company", said Sam Korus, an analyst for ARK Investment Management, which had 443,874 Tesla shares as of June 30.

Bloomberg's Selina Wang and Giles Turner reported that Musk and Son failed to reach an agreement over the structure of the company, citing sources. Tesla's other board members are Musk, his brother Kimbal Musk and venture capitalist Steve Jurvetson.

Despite the board's statement, it was clear early Wednesday that the euphoria had worn off over Musk's bold claim that he had the funding secured to take the electric-car maker private.

Musk also wants Tesla's employees to remain shareholders.

Related news