Elon Musk, chief executive of Tesla, said on Monday that he had met with representatives of a Saudi fund operating sovereign funds.
Write in a to post on Tesla’s blog, Mr. Musk gave his most complete explanation for what he said were the circumstances behind his August 7th. message on Twitter that he “planned to take Tesla privately at 420 dollars” and had “guaranteed funds”. sent Wall Street scramble for more information.
In the blog post, Musk said the Saudi fund had approached him several times about the privatization of the company as part of the country’s efforts to diversify its economy beyond oil.
Mr Musk said that after several meetings that started in early 2017, he had left on July 31 discussions with the fund’s general manager “without a doubt that an agreement could be reached and that” 39, it was only a matter of moving the process forward “. “
“I understood from him that no other decision maker was needed and that they were eager to proceed,” Musk wrote. He added that he had kept in touch with representatives of the Saudi fund, which had recently bought a nearly 5% stake in Tesla, and had also been in touch with other investors.
Musk said he informed Tesla’s council of his intentions on Aug. 2.
Tesla shares jumped nearly 11% after Twitter post, and Securities and Exchange Commission officials contacted the company asks why Mr. Musk had not made the announcement in a regulatory filing.
John Reed Stark, a former USC lawyer who specializes in investigating Internet fraud cases, said Mr. Musk was complicating things for himself with every tweet and every blog post. He said he would advise a general manager to avoid commenting online on the prospect of taking a private company.
But he said that it was not clear that the SC could argue that there had been a manipulation of the market. He said that this would be for the benefit of Mr. Musk when he made his initial comment on “secured financing”.
“Under no circumstances is this a stalemate without documentary evidence or evidence of intent to defraud,” said Stark, who heads a cybersecurity consulting firm. “These are very difficult cases to prove.”
Explaining his initial tweet on his blog on Monday, Mr. Musk said he could not discuss with major shareholders of Tesla about the prospect of privatizing the company without disclosing it to all investors. He also seems to make a distinction between his responsibilities as CEO and as an investor. “When I made the public announcement, as for this blog post and all the other discussions I’ve had on this topic, I’m speaking to myself as a potential bidder for Tesla,” he wrote.
Musk said the Tesla council was forming a special committee to evaluate any possible privatization project. He pointed out that the process would be largely funded by equity, rather than a more common approach to buyback. “I do not think it would be wise to significantly increase Tesla’s debt,” he wrote.
Musk said his “best estimate” was that two-thirds of Tesla’s current shareholders would decide to keep their shares. In this scenario, he said, the amount needed to ensure the company’s privacy would be far less than the $ 70 billion theoretically required if all shares were purchased for $ 420 each.
Bankers and lawyers felt that an agreement to take Tesla in private could cost between 10 and 20 billion dollars. Tesla shares rose slightly on Monday afternoon.