Tesla co-founder and CEO Elon Musk admitted Monday that his claim of “funding secured” did not mean that he had a deal in place to fund a private buyback of the electric car company’s outstanding stock.
Musk published a blog post confirming a report that Saudi Arabia’s Public Interest Fund would be the previously unknown party bankrolling the move to re-privatize the company — and revealing that his tweet last week claiming “funding secured” was merely an assumption on his part. “It was just a matter of getting the process moving,” he said.
According to Musk, Saudi Arabian representatives approached him with multiple offers to privatize Tesla via a state-run sovereign wealth fund’s purchase. He wrote:
Going back almost two years, the Saudi Arabian sovereign wealth fund has approached me multiple times about taking Tesla private. They first met with me at the beginning of 2017 to express this interest because of the important need to diversify away from oil. They then held several additional meetings with me over the next year to reiterate this interest and to try to move forward with a going private transaction. Obviously, the Saudi sovereign fund has more than enough capital needed to execute on such a transaction.
Recently, after the Saudi fund bought almost 5% of Tesla stock through the public markets, they reached out to ask for another meeting. That meeting took place on July 31st. During the meeting, 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.
I left the July 31st meeting with no question that a deal with the Saudi sovereign fund could be closed, and that it was just a matter of getting the process moving. This is why I referred to “funding secured” in the August 7th announcement.
Following the August 7th announcement, I have continued to communicate with the Managing Director of the Saudi fund. He has expressed support for proceeding subject to financial and other due diligence and their internal review process for obtaining approvals. He has also asked for additional details on how the company would be taken private, including any required percentages and any regulatory requirements. [emphasis added]
Musk closed out the post by stating: “I will now continue to talk with investors, and I have engaged advisors to investigate a range of potential structures and options.”
That language is a major departure from a post last week which read, “Investor support is confirmed. Only reason why this is not certain is that it’s contingent on a shareholder vote”
Tesla shares “jumped 11 percent” following Musk’s tweets predicting privatization of the company, leading to lawsuits filed by investors and a Securities Exchange Commission (SEC) investigation.
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
Shareholders could either to sell at 420 or hold shares & go private
— Elon Musk (@elonmusk) August 7, 2018
Musk defended his privatization announcement via the aforementioned tweets and email as “the right thing to do” in the interest of public disclosure.
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