Tesla going private: Wheres the money coming from, Elon Musk?


To take a public traded company the size and net worth of Tesla back to private would usually require a "leveraged buyout" where the company itself or another party takes a large loan to buy out all the shares from the companies shareholders to go private.

Mr Musk thrust his fellow directors into an unprecedented situation by tweeting Tuesday that he was considering taking Tesla private at $420 a share.

Tesla shares were suspended from trading for 90 minutes, during which the firm announced in a regulatory filing that the company is indeed looking at such privatization possibility although no decision has been made.

Tesla shares fell 1.5% to USA $ 374 in Wednesday's trading after closing 11% higher on Tuesday. Tesla, which hasn't been accused of wrongdoing, didn't immediately respond to a request for comment. The company has completed more than 50 successful Falcon launches and snagged billions of dollars in contracts, including from NASA and the U.S. Department of Defense. "And, if you stay as a shareholder, you have less information than before and you are depending more and more on Elon Musk".

The deal would be the biggest leveraged buyout of all time, beating the $45 billion record set by Texas power utility Energy Future Holdings.

Mr Musk, a 47-year-old investor and engineer, stunned financial markets on Tuesday, when he revealed on Twitter he was considering a take-private deal for Tesla, an auto manufacturing pioneer that developed the world's first ever premium all-electric sedan vehicle.

"I'm still trying to understand why he even went public like this", Whiston said, "because I don't see a point in going public to say you are considering going private unless you're trying to get, perhaps, the price higher than $US420 a share, or you're just really eager to hurt the short-sellers".

SoftBank is now not interested in a deal for Tesla after earlier this year taking a stake in General Motors Co's self-driving unit, Cruise, Reuters reported earlier on Wednesday. It is not clear if PIF is interested in financing Mr Musk's proposed take-private deal.

Shares of the electric-car manufacturer erased gains prompted by his surprise tweet, falling as much as 6% on Thursday.

In an internal letter to Tesla employees, Musk confirmed he was considering taking the company private in order to free it from "short-term thinking" and other "distractions".

Some on Wall Street shared that view.

No major banks or investors have come forward to say that they have been contacted to help fund the take-private move - which, at about $70 billion, would be the largest LBO ever.

The stock spike after the earnings call led to Tesla short-sellers getting burnt by over US$2 billion.

The six board members who issued the statement on Wednesday included James Murdoch, chief executive of Twenty-First Century Fox Inc and Brad Buss, who was the chief financial officer of solar panel maker SolarCity until it was bought by Tesla in 2016.

It's also possible Musk has some unconventional plan that would take Tesla private without using traditional sources.

Musk has also said on multiple occasions that Tesla will become profitable by the end of this year and won't need to raise additional funds, despite its increased cash-burn rate in recent quarters.