Published: Sat, March 18, 2017
Markets | By Lucia Cruz

Tesla Offers $250 Million Of Common Stock + $750 Million Convertible Senior Notes


In a shareholder letter issues last month, the company noted that it expects "to invest between $2 billion and $2.5 billion in capital expenditures ahead of the start of Model 3 production".

To raise the US$1.15 billion ahead of the launch of the company's Model 3 electric vehicle, the company plans to offer its investors US$250 million of common stock.

The press release continues: "The aggregate gross proceeds of the offerings, including the options granted to the underwriters, is expected to be approximately $1.15 billion".

It sold $850 million worth of convertible senior notes, or debt, which is due 2022. With that added to the tally, the maximum amount the company could potentially raise touches the $1.15 billion mark.

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Meanwhile, Tesla's chief financial officer, Jason Wheeler, will leave the company in April to take a job in the public sector after a year with Tesla.

Tesla's CEO Elon Musk will be participating, with the purchase of an additional $25 million of common stock, going by the press release. With respect to the notes, Tesla intends to enter into convertible note hedge transactions and warrant transactions to limit dilution of its common stock.

Tesla has repeatedly turned to Wall Street for fresh capital throughout its history.

Tesla Inc.is about to start production of its upcoming Model 3 later this year, but a lot of analysts believe that building the auto will come at a massive cost for the company. Musk has been borrowing hundreds of millions from Morgan Stanley and Goldman Sachs in order to participate in nearly all of Tesla's new capital raises and maintain his large stake in the company, which is now worth about $9 billion out of a total valuation of $42.5 billion. Many observers even went on predicting that Tesla would be trying to raise as much as $2.5 billion. Especially considering that the image featured a auto that appeared to have been in the final phases of the design process.

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