Tesla To Raise $1.5 Billion In Bond Offering

Tyler Durden's picture

Just days after reporting its biggest quarterly cash burn in history, Tesla announced on Monday it plans to raise about $1.5 billion in new cash, although in a welcome change for equity investors, this time it decided against an equity or convertible sale, and will offer bonds instead to take advantage of the insatiable bond market, as the carmarker seeks to ramp up production of its latest Model 3 electric vehicle. Tesla had over $3 billion in cash on hand at the end of the June quarter, compared with $4 billion at the end of the previous quarter and $3.25 billion a year earlier.

The debt offering comes as Tesla has reportedly received thousands of advance reservations for the Model 3, which Elon Musk said were averaging at about 1,800 per day since the car's launch in late July. Tesla counts on the Model 3, its least pricey car, to become a profitable, mass market electric car maker although it may have difficulties in a market that is becoming increasingly competitive.

At the launch event, Musk said the company would face "at least six months of manufacturing hell" as it increases production of the Model 3, which has a $35,000 base price.

Tesla's cash burn, expected to top $2 billion this year, hit a record $1.16 billion in the second quarter...

... and prompted short-sellers like David Einhorn to add bets against the Palo Alto, California company, which remains the most crowded global short name.

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Looney's picture

 

Electric cars… Hybrids… Hydrogen engines… What I pile of tree-hugging shit!

There’s only one truly eco-friendly vehicle on the road today – the Amish Buggy.  ;-)

Looney

The Wizard's picture

The irony is a company named Tesla is no where close to technlogy Nikola Tesla was developing. Tesla didn't require batteries to produce energy. He was using he magnetic flow of the earth which he called aether. It is a mockery to the Tesla name.

jcaz's picture

Gee, wonder why Elon didn't bother to at least mention this during earnings?  It's called MATERIAL INFORMATION.......

Someday Tesla will be forced to play by the rules, will be interesting to see what happens....

1800 orders per day now?  Last week it was 1800 orders per week-  guess it doesn't really matter when you're just making up numbers..........  

Let's see what happens to these "orders" when the snowflakes who have zero intention of taking delivery on a car figure out that they can't flip their $1000 deposits on Ebay......

Pool Shark's picture

When I think of Tesla, the image that comes to mind is of Elon Musk standing behind the wheel of a steamship (ala Phileas Fogg) burning all the furnishings and superstructure in a desperate attempt to reach his destination. Unfortunately, if he even manages to reach 'port' he'll find there's no 'there' there...

 

The_Juggernaut's picture

Lmfao @ this ponzi bullshit and anyone dumb enough to give this joker their money.

LargeHardonCollider's picture

Hey Looney!   Aren't you forgetting horse flatulence?  That is methane, pal!

Wang Dang SP's picture

Musk has to replace the government grants with something.  The free shit ponzi must survive.

UpTo11's picture

CB's love some corporate debt.

rcintc's picture

Please explain this to me as if I were a 4 year old.

I understand when Apple and Verizon raise $Billions, they have free cash flow to pay the debt.

If Tesla does go forward with this offering, who, in their right mind, would even think about purchasing one of these bonds?

Not it....

jcaz's picture

LOL- yep, plus it's gonna be unsecured debt- so unless Tesla is going to offer a 16.99% coupon with it, lotsa luck......

Does make me wonder why they aren't securing the debt, tho-  I guess nobody was willing to give them a decent rate with it being secured, so Tesla said screw it. which suggests to me that Tesla is scraping the bottom of the barrel here a bit-  gee, and I thought things were going so well.....

SDShack's picture

GM Bond holders... no... wait...

Clowns on Acid's picture

"Gee, wonder why Elon didn't bother to at least mention this during earnings?  It's called MATERIAL INFORMATION....."

This is a huge error / red flag on Tsla's part. I am sure that the SEC is looking at this right now.  Well actually in a fgew days after they finsih watching "Debbie does the Dallas Fed". 

not dead yet's picture

According to one financial blog the strippo 3 has a range of 220 miles. For $9000 more you can buy one with a range of 310 miles. Supposedly until at least November Tesla is only going to make the longer range model. For 35 grand the interior is really cheap so one has to lay out thousands more on an interior upgrade. Plus very few colors are available as standard so most will have to upgrade for thousands more. Except for the suckers in the media and Musk worshipers we all knew the 35 grand base wasn't going to give much value. Expect even more cancellations. Musk will also sell you the self driving features, extra of course, that are unusable until the software is DEVELOPED which won't be for another year according to Musk. At least. Contrary to those claiming tens of millions of self driving cars on the road by 2020 the software and hardware are far from being ready for prime time. Most self driving cars are run local under special permits and before the cars and technology will be approved testing will need to be done over all kinds of roads and conditions for millions of miles. More Musk pie in the sky.

Techno droolers will love the big screen in the dash of the 3 that will control and display everything including the speedometer. Doubt the average buyer will like having to scroll through screens when they can turn a nob or punch a button. The droolers will claim these people are stupid dino's who are afraid of tech but reality is the dino's aren't stupid enough to think complexity is progress. All of these kinds of systems, which control some not all functions, from all auto makers are still not perfect and garner the most complaints from buyers and yet Tesla goes whole hog on it to run everything. Reminds me of a guy who bought a used computer from a geek. The geek intentionally ERASED all the icons and could only access the programs by typing in the command lines. I guess clicking on an icon made him feel inferior and typing the command lines to access the programs made him feel like the superior being he thought he was.

Chauncey Gardener's picture

I'd  give you  1,000 up-votes for pointing out that Elon, the Emporer, has no clothes.

pugilist's picture

"There’s only one truly eco-friendly vehicle on the road today – the Amish Buggy."

Do you know how much methane those things produce?!

Looney's picture

 

Do you know how much methane YOU produce?!  ;-)

Looney

Antifaschistische's picture

total liabilities.....as long as cash is flowing from the CB.....nothing else really matters.

fy16 17,535,342,000

 fy15  6,936,950,000

fy14   4,860,761,000

https://finance.yahoo.com/quote/TSLA/balance-sheet?p=TSLA

 

oncemore's picture

I suppose, that he knows his own production.

Doom Porn Star's picture

Whoa!  

Wait a minute: who can verify that Tesla SOLD - that is DELIVERED - 2,770 S Class vehicles in July???!

 

I have heard NO report and seen NO evidence that any such numbers of these BETA autos have been DELIVERED to paying customers not associated with Tesla by direct investment or empoyment with Tesla.

It is my understanding that only a handfull of the vehicles were doled out to Tesla employees for what amounts to limited street use testing purposes.

JRobby's picture

It will be over subscribed. Investors love to be bludgeoned.

jcaz's picture

The S is the existing model, the 3 is the beta car....   

Still gotta question the business sense of dropping the price of the S by $3000....  So lemme get this straight-  you're selling as many of the S's that you can produce,  but you're cash-strapped and losing money on every car you sell, and your move is to DROP the price of the car?

Man, that Elon are a genius.....  I wanna go to THAT business school.....

de3de8's picture

Geez,you missed the basics of your business courses, you make it up in volume,

SDShack's picture

Modern business is not to make a profit. Is not to produce a quality product that lasts or is in demand. Is not to organically grow thereby producing job and wage synergies that are the basis of the middle class. No, modern business only exists to inflate stock prices that drive money via stock options to the elite business owners/bankers, who cash out before the bubble blows leaving the masses to deal with the debts. Ivy League Ponzi.

Yen Cross's picture

 Good luck

  The RATS are scrambling.

JohninMK's picture

Mmmmm. Do bonds take priority over shares in a crash?

Yen Cross's picture

 Do stocks take priority over bonds in a crash?

 In the overall scheme of things, you don't sound sophisticated enough to make those decisions. I suggest that you stay flat, and eat the popcorn.

Epimetheus's picture

bond holders get money from bankruptcy FIRST.

when everything tesla owns is auctioned off, bondholders are paid FIRST.

THERE ARE NO CENTS LEFT FOR SHAREHOLDERS IF TSLA GOES BANKRUPT.

As of today, Tesla Inc's share price is $356.91. Tesla Inc's Tangible Book per Share of Mar. 2017 for the quarter that ended in Mar. 2017 was $27.93.

TSLA ( 3/31/2017 )
Net Tangible Assets 4,558,127 (MILLIONS)
https://finance.yahoo.com/quote/TSLA/balance-sheet/

Tesla Inc's long-term debt for the quarter that ended in Mar. 2017 was $7,148 Mil
https://www.gurufocus.com/term/Long-Term+Debt/TSLA/Long-Term-Debt/Tesla-...

So in this case, the bondholders would get about 63 cents on the dollar. (4.5 billion net tangible assets / 7.1 billion long term bond debts)

would i buy tesla bonds? no unless their bonds paid 20% per year.
are my calculations worthless when the fed is printing money non stop and giving it to their best friends? probably.

LawsofPhysics's picture

Wait a second, what is their market share again? How far from fundamentals and GAAP can we go?

"Full FAITH and Credit"

Yen Cross's picture

 How far from Non-GAAP can we go?

  Buybacks/writeoffs/mergers/cost structure-repricing...ect     [smaller packages with more air in them]

  Fixed it for ya.

quasi_verbatim's picture

Das Auto Elektric comes out of the same stable as Global Warming Mania. Neither horse will run, and both are destined for the knackers' yard.

Arnold's picture

Give us a time line, and we will build you a pigeon proofed statue.

One leg in the air, okay?

manZman's picture

1.5? Why not 15? It's not like they are going to have trouble finding buyers (aka CBs). Just throw the leftovers into a nice stock buyback like every other good tech company. 

otschelnik's picture

Better the bond holders then the tax payers....

Yen Cross's picture

Uuummm, most of the bond holders are tax payers.  Pension plans and fixed income.

silverer's picture

Yes, but direct purchase of bonds is a choice, not a gun to the head. Taxpayers have guns to their heads. Bond purchasers have oatmeal in their heads.

Doom Porn Star's picture

"Uuummm, most of the bond holders are tax payers.  Pension plans and fixed income. "

...& when the Public Pensions holding the bag find out the bag is empty they will go right back to the taxpayers for another top-off of their eggregiously mismanaged plans.

Don't act like you don't know what the fuck I'm talking about CalPERS.   -I'm looking right at YOU.

SDShack's picture

Ask GM bond holders who got paid first, and who actually provided the bailout money.

yogibear's picture

It's easy for Elon the scam man to issue bonds. Tesla should issue multiple  times that much in this free central bank money pool market.

How about issuing 50 billion instead?

youarelost's picture

Daddy Obama isn't there to create another subsidy

lester1's picture

IRS rules state that if a business is not profitable within 5 years then it's NOT considered a business, it's considered a hobby.

overmedicatedundersexed's picture

amazon, never made a dime in it's first 5 yrs - tesla gets fiat money cause well it's tesla much like amazon

MCDirtMigger's picture

Spamazon is still unprofitable if you remove the CIA subsidies.

Vilfredo Pareto's picture

That is only for serfs.

 

Read the fine print for exclusions and special offers not available to you.

NEOSERF's picture

They need to move HQ to Europe where the ECB seems to be running out of hiqh quality bonds like Tesla to purchase

Clowns on Acid's picture

Swiss Nat'l Bank buys 'em whereveer they are issued.

Bai Suzhen's picture

Why not raise money by selling some cars at a profit, or at least at break even?  Umm...forget that.  Must not have had my coffee this morning.

MK13's picture

In order to make profit, selling 25k vehicles and losing 1 billion in first quarter, TSLA car would have to be 40k more expensive just to break even. Good luck with math when talking to libtards.

lester1's picture

The Fed still doing "currency swaps" with the Swiss National Bank so they can buy stocks and corporate bonds ?

overmedicatedundersexed's picture

tesla..why not add a $1000 BOND MUST be purchased before you get your S model..people will buy the S model for the good of the planet, so a little 1000 dollar bond will be a small penalty to pay..