Tesla Board Confirms It Never Saw LBO "Financing Plan" From Musk

Three days into the Tesla "going private" saga, everyone continues to scramble for more information on the biggest wildcard in the entire equation: the "committed funding" as represented by Elon Musk: shareholders are asking where it is; bankers - i.e., those who should have arranged it - are asking where it is; even the SEC is asking where it is (and probing if Musk was being "truthful" with the alternative being stock manipulation which opens up Tesla to fraud lawsuits), and now Reuters reports that even the Tesla Board of Directors wants to know where it is.

According to Reuters, Tesla's board of directors is seeking more information from CEO Elon Musk about the finance for his plan to take the U.S. electric car maker private.

And here is the punchline: While Tesla's board has held multiple discussions about the proposal - as it documented in its statement on Wednesday - it has "not yet received a detailed financing plan from Musk and specific information on who will provide the funding."

As a reminder, in a statement on Wednesday, Tesla's board said its discussion with Musk "addressed the funding" for the deal, without offering more details. And now we know why: because it had none, and one increasingly wonders if the Board simply made up the fact that it had multiple discussions just to cover Musk's back.

But there is another big problem, if only from a timing/legal standpoint: if the board has no idea where the funding is coming from, there is no way it could have signed off on it, thereby "securing it", which means that all else equal, Musk's tweet that sent the stock price soaring was a fabrication.

As Reuters adds, the exact information that Musk communicated to the board about his plan could not be learned.

Meanwhile, as CNBC reported earlier and as Reuters confirms, the board expects to make a decision on whether to launch a formal review of Musk's proposal in the coming days, and is speaking to investment bankers about hiring financial advisers to assist it in its review in such scenario.

And, as we noted earlier, if the board launches a formal review of Musk's bid, he would have to recuse himself, or a special board committee would have to be formed.

Of course, that presumes that the SEC doesn't determine first that Musk never had any "committed funding" in the first place and what ensued on Tuesday was one of the greatest acts of stock manipulation in recent history. In that case, his recusal from the board would be permanent.

 

Comments

booboo Masher1 Thu, 08/09/2018 - 18:17 Permalink

Young Elons parents were always the last to know about his tall tales and were frequently sent notes by his teachers of his adventures with Xylon his buxom temptress riding across the galaxy in their flaming solar powered spaceship in search for the mythical Solar City.

In reply to by Masher1

lock-stick MozartIII Thu, 08/09/2018 - 21:05 Permalink

It's all ONE SICK, PATHETIC SPAMMER!!!

•• lisa.roy39  ("I SUCK DICK ON THE INTERNET FOR LAND ROVERS!")

•• Free This (ABOVE, in all his 7th grade glory - JACKASS  as new icon!)

•• beemasters

•• MoreSun (whacked, OH SO WHACKED!!)

•• Monad  (AnonQ Live Action Figure)

•• Adolfsteinbergovitch ("I TORMENT THE WOMAN WHO SUCKS DICK!")

•• roea.rita ("I SUCK DICK ON THE INTERNET FOR LAND ROVERS!")

•• Cryptopithicus Homme (bitcoin spammer - imaginary "friend")

•• Leakanthrophy (PORN for Jesus!)

•• 07564111 ("I PRETEND I DON'T KNOW ANY OF THEM!")

•• Africoman

•• Sanctificado

•• PrivetHedge

•• Cheolli

•• bobcatz

dozens and dozens and dozens of banned log-on's -- more than seven years!

 

....and all the while, the pathetic little SPAMMER sits in his leaky, moldy, smelly single wide in Western New York, surrounded by garbage and dirty clothes, trying to find his dick amidst rolls of fat, talking to his ACTION FIGURES and wondering where his life went.

 

In reply to by MozartIII

NiggaPleeze Masher1 Thu, 08/09/2018 - 18:18 Permalink

But there is another big problem, if only from a timing/legal standpoint: if the board has no idea where the funding is coming from, there is no way it could have signed off on it, thereby "securing it", which means that all else equal, Musk's tweet that sent the stock price soaring was a fabrication.

That's completely false - and here I thought ZH knew something about this topic.  If Musk wants to launch a tender offer he does not need Board approval for the offer, nor for the financing.  In fact hostile tender offers are fairly common, and these never obtain board approval at all.  Even in (eventually) friendly offers, takeovers are often financed prior to negotiations with the board to give leverage in board negotiations. 

But at least ZH seems to have drooped its "LBO" fascination.  As Musk never indicated the funding would be debt-based (yes, there are companies with enough cash to buy Tesla without debt financing), or if it would be, if it would be secured by Tesla's assets (which makes little sense given its balance sheet and the "fraudulent conveyance" trap).

In reply to by Masher1

NiggaPleeze nonclaim Thu, 08/09/2018 - 18:38 Permalink

Not much of an escape since (a) Musk already holds 20% of the vote, and (b) enough shareholders would be expected to approve the offer given its substantial premium.  In any event shareholder approval (in the form of tendering) is required for any tender offer so doesn't add anything new.  What will be tested is the veracity of the claim that funding has been secured, which is actually quire hard to fathom.

In reply to by nonclaim

philosophers bone NiggaPleeze Thu, 08/09/2018 - 19:10 Permalink

"If Musk wants to launch a tender offer he does not need Board approval for the offer, nor for the financing."

Uh, you're half right  - he doesn't need board approval but he needs financing.  AND he said he had it.

You can't just announce a tender offer for a public company and not have financing lined up.

In reply to by NiggaPleeze

Cognitive Dissonance philosophers bone Thu, 08/09/2018 - 19:42 Permalink

Uh, you're half right  - he doesn't need board approval but he needs financing.  AND he said he had it.

Technically speaking, Musk said "Funding secured" which is legally meaningless. I could tell someone I had 'BJ secured' but that doesn't mean I have a BJ in hand (lol) or even a contractual promise for a BJ.

That doesn't mean Musk is out of the woods legally because the SEC makes up the rules as it goes along.

Somewhere in the distance I hear Bill Clinton saying that it depends on what is is.

In reply to by philosophers bone

NiggaPleeze philosophers bone Thu, 08/09/2018 - 19:48 Permalink

he doesn't need board approval but he needs financing

I thought I used simple English, but obviously not simple enough :).  "Musk ... does not need Board approval ... for the financing".

You can't just announce a tender offer for a public company and not have financing lined up.

You most certainly can.  Lots of tender offers are conditioned upon the acquirer obtaining financing.  Here's an example.  More generally:

Tender offers can be conditioned on the bidder's obtaining financing.  A number of cases have held that the Williams Act [which governs tender offers for securities registered under the federal securities laws] does not require a bidder to have financing in place prior to launching a tender offer.

That said, Musk wrote he had secured financing, so if he did not, it's a material false statement of fact, as well as potentially stock manipulation (seems rather easy to prove given his history of deriding Tesla shorts).

In reply to by philosophers bone

NiggaPleeze NiggaPleeze Thu, 08/09/2018 - 19:50 Permalink

Amazing.  All I am doing is stating a clear, indisputable principle of law and an actual, often used component of actual "conditional" tender offers and I get all these down-votes.

So many idiots on ZH these days, for crying out loud.

In reply to by NiggaPleeze

squid Masher1 Thu, 08/09/2018 - 19:22 Permalink

When there's an orange jump suit on the table?

You bet your ass that board will chop him free...

Just....

Like....

That.

They're not interested in sharing a cell with Bernie like Elon's soon to be.

 

Squid

In reply to by Masher1

adr Thu, 08/09/2018 - 18:18 Permalink

Musk was trying to be funny and tanked his company. Tesla Musksuckers are in denial that their South African Jesus could screw up this bad.

By next week it will be clear that Musk lied and the company is toast unless they find a buyer at $70billion+. Otherwise the billions in TSLA equity vaporizes as the share price plummets.

Maybe Musk and the board know the company is toast anyway and concocted this bullshit to bail out, knowing they might just pay a few million in fines and keep a few billion they sold off to suckers.

There is no way the SEC can let this stand and still claim there is a functional market. If they do there is no stopping any CEO from claiming he has a buyout offer for a 200% premium and cashing out when the stock goes through the roof.

Tim Cook could claim tomorrow that Switzerland has decided to buy Apple for $2.5 trillion.

not dead yet Kaiser Sousa Thu, 08/09/2018 - 19:17 Permalink

The manipulation you mention was pervasive and well under the radar. One had to dig deep to uncover the evidence and even then it only made news in financial circles. In Musk's case it was front page news and open and shut as they have Musk's words to hang him. All government agencies are political animals and the SEC knows full well they have to do something this time or they are the ones who will get roasted.

In reply to by Kaiser Sousa