Tesla CEO Elon Musk has issued a public statement backtracking on his claim last week that he is taking the company private with funding "secured".
In the statement, which comes after Tesla was hit by class-action lawsuits from disgruntled investors and a probe from the Securities and Exchange Commission (SEC), Musk states that he tweeted the plan on Tuesday "because I felt it was the right and fair thing to do".
...no question that a deal with the Saudi sovereign fund could be closed... it was just a matter of getting the process moving
The letter also states that he notified the Tesla board of his plan on 2 August, the week before he publicly revealed it.
"My proposal was based on using a structure where any existing shareholder who wished to remain as a shareholder in a private Tesla could do so, with the $420 per share buyout used only for shareholders that preferred that option," he states.
The next step, he adds, would've been to consult with some of the company's largest shareholders, although that would also have made them party to privileged financial information, given that the company's stock price was then around $350 and Musk was proposing to pay shareholders $420 per share.
Am considering taking Tesla private at $420. Funding secured.— Elon Musk (@elonmusk) August 7, 2018
"The only way I could have meaningful discussions with our largest shareholders was to be completely forthcoming with them about my desire to take the company private.
"However, it wouldn't be right to share information about going private with just our largest investors without sharing the same information with all investors at the same time. As a result, it was clear to me that the right thing to do was announce my intentions publicly.
"To be clear, when I made the public announcement, just as with this blog post and all other discussions I have had on this topic, I am speaking for myself as a potential bidder for Tesla."
Investor support is confirmed. Only reason why this is not certain is that it's contingent on a shareholder vote. https://t.co/bIH4Td5fED— Elon Musk (@elonmusk) August 7, 2018
Musk claims that the sovereign wealth fund of Saudi Arabia has approached him a number of times about backing a bid to take Telsa private, claiming that he had a meeting with them at the beginning of 2017 and, again, shortly after the fund took a five per cent stake in Tesla.
The last meeting was on 31 July, Musk claims, from which he left "with no question that a deal with the Saudi sovereign fund could be closed, and that it was just a matter of getting the process moving". That he adds, is why he claimed to have had "funding secured" in his tweet revealing the privatisation plan last week.
Musk adds that the managing director of the Saudi fund supports taking the next steps, which would entail "financial and other due diligence and their internal review process for obtaining approvals".
Reports that more than $70 billion would be needed to take Tesla private dramatically overstate the actual capital raise needed
However, he admits that there are also a number of "additional details" that need to be nailed down, including "any required percentages" and regulatory requirements.
He added that he is also talking with other potential investors and said that any deal would be on the basis of equity, rather than fresh debt loaded onto the back of the already heavily indebted, loss-making company.
"Reports that more than $70 billion would be needed to take Tesla private dramatically overstate the actual capital raise needed. The $420 buyout price would only be used for Tesla shareholders who do not remain with our company if it is private. My best estimate right now is that approximately two-thirds of shares owned by all current investors would roll over into a private Tesla."
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