Elon Musk explains ‘funding secured’ tweet

Noah
Berger / AP Photo

• Elon
  Musk said in a company statement on Monday
  morning that he thought tweeting about possibly taking Tesla private was the “right and fair thing to
  do.”
• Musk said that the Saudi Arabian sovereign wealth fund
  had brought up taking Tesla private multiple time during the
  last two years. 
• Musk said he met with the fund’s managing director on
  July 31 and left that meeting confident that a deal to take
  Tesla private with the fund could be done. 

 

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Elon Musk defended his “funding secured” tweet in a company statement on Monday.

Musk said the Saudi Arabian sovereign wealth fund had brought up
taking Tesla private multiple times for almost two years. The
Saudi fund recently bought a 5% stake in the company. Musk said
he met with the fund’s managing director again on
July 31 and left that meeting confident that a deal to
take Tesla private would close. 

“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,” Musk said in his
statement. 

“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.”

Last Tuesday, Musk tweeted, “Am considering
taking Tesla private at $420. Funding secured.” 

Musk said that he made the announcement about wanting to take the
company private because he wanted to have “meaningful
discussions” with large shareholders, but couldn’t do so if he
didn’t disclose his desire for the company to all
shareholders. 

“I made the announcement last Tuesday because I felt it was the
right and fair thing to do so that all investors had the same
information at the same time,” Musk said. 

Musk did not disclose details about where the funding would come
from, nor did a statement from Musk on the company’s website
posted later on Tuesday have any details about where the money
would come from. 

This sparked confusion and raised
questions about whether funding was really secured. 

In his statement on Monday, Musk said that following his August 7
tweet, he has been in communication 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,” Musk said. 

Musk said that full details regarding the source of funding will
be provided before anyone is asked to decide on going private,
but that sharing information regarding that now would be
“premature.”

“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,” he
said. 

Musk said that a deal to take Tesla private would be primarily
funded by equity and not debt, and that he expects two-thirds of
shares owned by current investors to remain as part of a private
Tesla. 

“Therefore, 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,” Musk said. 

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