Tesla Slides On Report It Is Only Now Approaching Potential LBO Investors

It looks like Elon Musk lied when he said that the "funding was secured."

Assuring that the SEC will have its hands full, Bloomberg reports that only now are Elon Musk and his merry advisers men seeking a "wide pool" of investors to back a potential take-private of the automaker to avoid concentrating ownership among a few new large holders, according to people familiar with the matter.

Furthermore, quite contrary to even the loosest definition of "secured", BBG adds that Tesla is holding early discussions with banks about the feasibility and structures of a possible deal, citing sources, and only now is it canvassing investors including large asset managers.

It's not immediately clear how any of this is different from simply doing a follow on offering of public stock, one which takes out existing small shareholders, especially since Tesla would always have publicly filing (junk) debt as the core component of its capital structure, and thus instead of trading the stocks, those evil shorts would be buying CDS on the company instead.

Always a chooser and never a beggar, in addition to getting investors to allocate funds to a company that would have an idiotic pro forma leverage, Musk also hopes to retain control and "would prefer to amass a group of investors who could each contribute part of the funds because he wants to avoid having one or two large new stakeholders in the company." Which immediately kills either SoftBank and the Saudi Sovereign Wealth Fund as potential investors. It also prompts the question: does Musk even know what going private means?

Most troubling, and where the SEC should immediate chime in, is that according to the report deliberations are only at an early stage and the company hasn’t yet formally hired a bank to work on the process or made a final decision on how to proceed.

As a reminder, since Musk first tweeted on Tuesday that he was considering taking Tesla private at $420 a share and that he had “funding secured,” he’s offered no evidence to back up the statement. People close to at least 16 financial institutions and technology firms, who spoke on the condition of anonymity, have said they weren’t aware of financing having been locked in before Musk’s tweet.

Meanwhile, even as the SEC is about to have a field day digging into Musk's 10b-5 violation, several banks are already pitching possible deal structures or financing scenarios - now that they know what Musk is looking for - for either Tesla or the company’s board to consider, chasing the millions of dollars in advisory fees that could be offered to whomever wins the mandates.

According to estimates from Jeffrey Nassof, a director at Freeman Consulting Services, banks advising Tesla could make $90 million to $120 million in fees, while advisers to Musk could take home $30 million to $50 million. If a deal involves debt financing, those providing funding could expect fees of about $500 million.

And now that the company has admitted that there was no deal, no term sheet, no agreement, we will look closely at the what the SEC does next in light of what appears to have been a glaring securities manipulation. TSLA stock promptly slumped on the news.


wren Shitonya Serfs Fri, 08/10/2018 - 15:29 Permalink

A billion companies out there and all we ever here about is Tesla. It makes me wonder if he's paying for all this press, or if he is playing the media and succor reporters can't stop talking about him.

And why are you reporting on his underpants? Stop giving this idiot press coverage! He will either sink or swim, I don't care either way.

Or keep reporting on him, but report on other companies as well. That way I can skip over this idiot and learn about some new company that deserves attention.

In reply to by Shitonya Serfs

Antifaschistische PrivetHedge Fri, 08/10/2018 - 15:30 Permalink

So, in a previous Episode of Musk TV, he pissed off all the Wall Street insiders who had massive short positions, because their plants inside the SEC were bypassed with his tweet announcement and some of them got hurt because the ALGO arbitrageurs ramped TSLA to the moon.

Today on Musk TV, the algo arbs are getting smoked because their rumor sniffers didn't know how to properly discount Musk BS.


I don't know where all this lands, but it's beautiful.


In reply to by PrivetHedge

hedgemony rules SloMoe Fri, 08/10/2018 - 15:30 Permalink

Bubba: Elon, here in prison, there's a momma and there's a daddy.  Since you're new here, I'll give you a choice.


Elon: Why thank you Bubba.  I think I'll be the daddy.


Bubba:  That be fine.  Now come over here and suck momma's dick.


In reply to by SloMoe

Clock Crasher Fri, 08/10/2018 - 15:17 Permalink

It don't matter.  We are taking this bitch to 400 and beyond just like VW back in the day.  I can't wait to see the shorts faces ripped off without anesthesia. 

We are in a post Truth, post Apocalypse world. 


ludwigvmises Fri, 08/10/2018 - 15:18 Permalink

"Funding secured" will become a meme much like Chuck Prince's "We're dancing while the music is playing" a year before Citibank went tits up and had to be rescued by the government.

wmbz Fri, 08/10/2018 - 15:24 Permalink

'Ol Leon Mush's grand con game may be losing steam, or in his case battery power.

He'll have to take the weekend and polish up his game.

evokanivo Fri, 08/10/2018 - 15:28 Permalink

This seemed like such an obvious short it almost felt like a trap. If he had financing lined up that would basically rip any short's face off.

Quivering Lip Fri, 08/10/2018 - 15:30 Permalink

First off, this guy is a complete fraud, but will probably do as much time as John Corzine. If the SEC does nothing every CEO can do anything they want to manipulate their companies stock price.

Secondly who in their right mind would take this shitshow private. Would they have to take fraudulent SolarCity? How about the bullshit Boring company? Space X?

I'd imagine there's going to be a whole lot of lawsuits to come.

Nice job Elon maybe at some point someone will take it private. Probably for $50 a share.


Yen Cross Fri, 08/10/2018 - 15:30 Permalink

  The rocket "almost" landed on the barge.

  The Model-S can "almost" drive itself.

  We can "almost" bore a hole to the center of the Earth.

   Our production line at TSLA is "almost" automated.

   We "almost" have production where it should be.

   Solar City is "almost" profitable.

   I think I'm "almost" seeing a pattern here.


Countrybunkererd Yen Cross Fri, 08/10/2018 - 15:52 Permalink

I think that so close or whatever the full name is who posts here is Elon.  I am not sure it is Elon, but "they" commented on every TSLA post but curiously stopped after Tuesday (as far as what I have noticed at least) when "they" stated that the format of disclosure for "funding secured" was acceptable and posted some link about it.

Fitting if it is Elon...SO CLOSE.

In reply to by Yen Cross

wains Fri, 08/10/2018 - 15:30 Permalink

Maybe the Fed will print a shit ton, give it to Bank of America to buy Turdsla for 71 Billion then pay Warren Buffett to go on CNBS with Becky Quirk to tell Murica what a great deal it is.  Act 2.