Doubts grow over Elon Musk’s master plan to take Tesla private

Oscar PerryAug 09, 2018

Tesla directors have said they knew about Elon Musk's surprise proposal to privatise the money-losing vehicle maker before he tweeted about it and have met several times in the past week to discuss the proposal. It remained unclear who would fund the take-private deal.

FILE PHOTO: Elon Musk, founder, CEO and lead designer at SpaceX and co-founder of Tesla, speaks at the International Space Station Research and Development Conference in Washington, U.S., July 19, 2017.

Musk tweeted on Tuesday that he would like to leave public markets at $420 per share - a 20% upside to their price that day.

Musk later elaborated in a letter to Tesla employees saying that he was exploring the option.

Going private is one way to avoid close scrutiny by the public market as Musk and the company face those challenges.

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.

The key question following Musk's Tuesday tweet-storm was whether current investors, as represented by the board of directors, were interested in such a proposal.

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Taking Tesla private would also free Musk from his tumultuous relationship with Wall Street as a whole, which had been consuming a significant portion of his time as well as a significant amount of all news surrounding the automaker.

The whole thing isn't yet set in stone because it must be put to a shareholder vote. "If the process ends the way I expect it will, a private Tesla would ultimately be an enormous opportunity for all of us".

Tesla's shares were down less than one per cent at $376.31 U.S. in morning trading on Wednesday after closing up 11 per cent at $379.57 USA on Tuesday. The move is estimated to require north of $50 billion to buy out the public shareholders.

The company, which is losing money and burning through cash reserves, has not revealed how it plans to raise more than $70bn it needs to offer shareholders the $420 per share that Musk indicated.

The SEC is also reportedly looking into whether Elon's use of Twitter constituted sufficient disclosure.

The eccentric Musk announced the bombshell move Tuesday on Twitter, writing that he had secured funding to buy Tesla Inc.'s shares at $420 each.

Days after Tesla opened up the Model 3 configurator to all potential buyers, not just reservation holders who got a place in line over a year ago, uncomfortable math lingers over the automaker's.

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