Musk claims funding for Tesla going-private deal will be done with equity as Saudis eager to proceed

Tesla Inc (NASDAQ:TSLA) CEO Elon Musk said Monday that taking the electric-car company private will be done with equity and that a Saudi wealth fund that backs the move is eager to proceed.

In a blog posted on Tesla’s corporate website, Musk wrote that “most of the capital required for going private would be funded by equity rather than debt, meaning that this would not be like a standard leveraged buyout structure commonly used when companies are taken private.” He added that he does not think it would be “wise to burden Tesla with significantly increased debt.”

The Tesla chief sparked a firestorm last week after releasing a string of tweets about taking the company private. (To read Musk’s statement, click here.)

READ: Tesla faces SEC probe after Elon Musk’s tweetstorm about going private, says WSJ

Musk said the Saudi sovereign wealth fund approached him several times about making the move after it had acquired 5% of Tesla stock.

During a meeting on July 31, he said the managing director of the fund “expressed regret that I had not moved forward previously on a going private transaction with them, and he strongly expressed his support for funding a going private transaction for Tesla at this time. I understood from him that no other decision makers were needed and that they were eager to proceed.”

Musk and Tesla face two complaints filed in federal court in San Francisco last week that he misled investors to bolster the company’s stock.

READ: Tesla CEO Elon Musk takes Wall Street on a wild ride, considers taking electric automaker private

Musk claims that reports that it would take more than US$70bn to take Tesla private “dramatically overstate the actual capital raise needed” since the process would be accomplished through equity and not debt.

He added that the US$420 per share buyout price “would 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,” he wrote.

Tesla was founded in 2003 and is based in Palo Alto, California. It manufactures electric vehicles that use lithium-ion batteries to power its cars.

Musk also heads SpaceX, which aims to lower space transportation costs to spur the colonization of the planet Mars.

Contact Rene Pastor at [email protected]

Story by ProactiveInvestors