Tesla set to raise $2bn through stock offerings to keep its head above water
Tesla has announced plans to raise about $2 billion in capital through debt and stock offerings, as the car makers struggles to keep its head above water.
Earlier this week Tesla published a 10-Q filing with the Securities and Exchange Commission (SEC), stating it may “choose to seek alternative funding sources”.
This came after Tesla posted one of its most disappointing quarterly results in years last month, revealing a loss of $702 million (£543 million), while being pressured to re-evaluate its financial options due to a growing debt obligations.
Its debt pile now totals at around $10 billion (£7.75 billion) and is due to grow significantly in the coming months, with a $556 million (£430 million) debt repayment falling due in November.
Yesterday it filed to sell $1.35 billion in convertible notes and around $650 million in shares, sending the company’s stock jumping around two per cent.
Its chief executive Elon Musk, who has said on several occasions last year that the company would no longer need to raise capital due to the release of its flagship Model 3, will participate in the offering buying as much as $10 million in stock.
According to the filing, Musk hired Goldman Sachs, Citigroup, Bank of America Corp, Deutsche Bank, Morgan Stanley, Credit Suisse Group, Societe Generale and Wells Fargo & Co to underwrite the offering, but it is not yet know how many shares the banks intend to purchase.
It is thought that Musk overestimated the amount of cash that would be generated from the sale of the Model 3, touted to be company’s version of the Model T, making electric vehicles available to the masses.
However, in the first quarter Tesla saw a record decline in vehicle deliveries, alongside its biggest ever debt payment of $2.2 billion.