Tesla take-private skepticism grows after Elon Musk's funding claim

Reuters  Rebecca Cook

Reuters Rebecca Cook

The transaction would amount to the largest leveraged buyout - in which a company borrows money to repurchase shares and exit the public market - of all time.

By taking Tesla private, Musk believes that the company will be able to sharpen its long-term focus of revolutionizing an automobile industry dominated by fuel-combustion vehicles without having to cater to investors' fixation on how the business is faring from one quarter to the next.

Tesla stock opened at $369.09 on Wednesday, sliding almost 3 percent from its Tuesday closing price of $379.57.

On Tuesday, Musk revealed on Twitter that he was considering privatizing the company after taking it public in 2010.

The US Securities and Exchange Commission has made inquiries into Tesla in the wake of Musk's tweets, The Wall Street Journal reports.

But as the dust settles on Musk's latest Twitter escapade, questions remain over whether the Tesla chief executive broke SEC guidelines by tweeting the news.

It's unclear if Musk has misled investors, let alone whether he has done so intentionally.

Elon Musk has faced a barrage of criticism recently and his electric vehicle company Tesla has been taking a pounding from critics.

The move to take the company public would remove Musk, who himself has a 20 percent stake, from the public arena - and contentious criticism.

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Musk's tweets caused a flurry of activity in financial markets.

Musk is already CEO of another private company: SpaceX.

"I'm trying to accomplish an outcome where Tesla can operate at its best, free from as much distraction and short-term thinking as possible, and where there is as little change for all of our investors, including all of our employees, as possible".

Musk has promised a sustained net profit starting in the third quarter.

A statement was issued by six members of the electric carmaker's board after Mr Musk tweeted to say he had the funding to de-list the company.

China's Tencent Holdings Ltd, which took a 5-percent stake in Tesla a year ago, could also be a possible partner.

The whole thing isn't yet set in stone because it must be put to a shareholder vote. Many initially thought it was Elon Musk's attempt at a bad joke about marijuana, because "420" has always been associated with pot. He said funding was "secured", without elaborating.

The statement by the board, published by NASDAQ, confirms that the proposal is under serious consideration. Tesla is a legendary cash-burner, with roughly $10 billion in debts and $2 billion in reserves, and Musk would probably need in the tens of billions of dollars to buy out shareholders at the right price.

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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