Tesla: Wall Street Skeptical About…
Tesla finally ended up shyly up 0.3% last night on Wall Street, on a $ 356.4 price. The market did not really welcome the announcements of the boss of the group, who explained about the financing of the potential exit of the rating. Musk said it was supported by a Saudi fund, capable of assuming the weight of the operation.
On the sidelines of this announcement, Tesla’s CEO also delivered an interesting comment on Twitter’s social network: “I’m excited about working with Silver Lake and Goldman Sachs as financial advisors, as well as Wachtell, Lipton, Rosen & Katz and Munger, Tolles & Olson as legal advisors, on the proposed delisting of Tesla “. Musk said yesterday he hired advisers to study different structures and potential options for the deal. This should also allow it to arrive at a better evaluation of the number of existing shareholders who would remain in the capital after a delisting.
Elon Musk had indeed previously communicated yesterday Monday, after the heated debate stemming from the interventions of the boss of the group at the beginning of last week. Recall that Musk had reported plans to exit the price at $ 420 per title, to overcome the constraints of a market too focused on the short term.
In a tune posted yesterday on the Tesla blog, Musk confirmed that he considered a delisting, he thinks is a good solution for shareholders and the group. Musk also explained why he used the term “secure financing” about the deal, in a tweet announcing his intention to pull the group out of the stock market.
“Nearly two years ago, Saudi Arabia’s sovereign fund approached me many times about a take-off from Tesla, and they first met me in early 2017. in order to express their interest, because of the important need for diversification outside of oil, and then held several additional meetings with me during the next year to confirm their interest and to try to move towards an exit transaction. of the rating, “justified Musk.
Recently, the Saudi fund has acquired nearly 5% of Tesla in the markets. The fund would then have contacted the boss of Tesla again for a new meeting. The meeting took place on July 31st. “During the meeting, the managing director of the sovereign fund regretted that he had not made any progress towards a private transaction with me, and he strongly expressed his support for the financing of a delisting transaction for Tesla. ‘made it clear that no other decision maker was needed and that they were eager to proceed,’ said Musk.
“I left the meeting of July 31, no doubt, concluding that an agreement with the Saudi sovereign wealth fund could be reached and that it was simply a matter of moving the process forward. spoke of ‘guaranteed financing’ at the announcement of August 7, “said Elon Musk. “Following the announcement of August 7, I continued to communicate with the Managing Director of the Saudi Fund and expressed his support for a financial audit and due diligence process and their internal review process, in order to He also sought additional details on how the company would be delisted, including the required percentages and regulatory requirements. ”
“Another critical point to note is that before anyone is invited to decide on a delisting, all details of the plan will be provided, including the proposed nature and source of funding to be used. It would be premature to do so now, I continue to talk to the Saudi fund and I’m also talking to a number of other investors, which I have always planned to do, since I would like Tesla to continue to have a broad base It is appropriate to complete these discussions before submitting a detailed proposal to an independent committee of the board, “explained Musk.
The boss of Tesla believes that “most of the capital required to allow a delisting would be financed by equity rather than debt, which would not correspond to a standard structure of ‘leveraged buyout’ commonly used. Indeed, Musk does not think it would be wise to subject Tesla to a significantly increased debt.
An exit would cost significantly less than $ 70 billion, according to Musk
“Therefore, reports indicating that more than $ 70 billion would be needed for Tesla to become a private company significantly overstate the capital increase actually needed,” Musk said. “The $ 420 buyback price would only be used for Tesla shareholders who do not stay with our company if it goes out of stock.” My best guess at the moment is that about two-thirds of the shares held by all current investors would be transferred to a Tesla out-of-cost, “said Musk, who intends to discuss with investors.
Who is the Saudi PIF fund?
The Saudi Public Investment Fund (PIF) manages more than 230 billion dollars according to Reuters. Nevertheless, two thirds of the assets are local. The international portion includes financing commitments from the Blackstone US Infrastructure Fund, or investing in the SoftBank Vision Fund. The Saudi fund intends to sell oil giant Aramco a $ 70 billion stake in Saudi Basic Industries, which would give it the means to manage a transaction like the one Musk wanted.
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