Last week there were conflicting reports about Elon Musk’s plans to make Tesla private, but now the company’s co-founder has taken to their blog in order to offer an update on the situation.
According to Bloomberg, Tesla was in the process of looking for funding, discussing the possibility with banks and investors in the States as the company looked to concentrate ownership.
As it turns out that was an apparent rouse with Musk noting that he has been in talks with Saudi investors for some weeks now, in a deal that could be as much as $50 billion.
Earlier this month, Musk said that he informed the Tesla board that he planned to take the company private in his own capacity at $420 per share, with current shareholders willing to shoulder the new share price capable of doing so if they wished.
As it turns out, Musk has been moving around pieces on the board a few days prior to this, having met with investors from a Saudi wealth fund on 31st July this year, after they had been in contact about taking Tesla private in 2017.
Musk added that he left that particular meeting with representatives from the fund feeling confident that the company would indeed secure the funding required for this go-private venture.
So much so that he used the term “funding secured” when he mentioned his plans for Tesla last week.
When Musk took to Twitter to announce his plans, it also caused a brief halt on a number of stock exchanges across the globe, which prompted media and the US Securities and Exchange Commission (SEC) to probe for more detail, especially as it was unclear at the time as to how much funding would indeed be required, and where Musk planned to secure it from.
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
This is when rumours began swirling about potential Saudi involvement, which is part of the reason why Musk blogged an update today.
While the public and authorities were in the dark n this situation, Musk states that his board have been in the loop throughout the process.
“Another critical point to emphasize is that before anyone is asked to decide on going private, full details of the plan will be provided, including the proposed nature and source of the funding to be used. However, it would be premature to do so now.,” writes Musk in his blog post.
Adding that, “I continue to have discussions with the Saudi fund, and I also am having discussions with a number of other investors, which is something that I always planned to do since I would like for Tesla to continue to have a broad investor base. It is appropriate to complete those discussions before presenting a detailed proposal to an independent board committee.”
As for how much capital would indeed be needed in order to fund the go-private move, Musk would not give a precise figure, but has noted that the $70 billion being touted is highly overestimated.
“Reports that more than $70B 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,” concludes Musk.