Tesla shares jump on news of capital raising
Tesla has filed with regulators to launch about $2bn in fundraising through issues of new shares and debt
Bengaluru — Tesla said on Thursday that it had filed with regulators to launch about $2bn in fundraising through issues of new shares and debt, with CEO Elon Musk pitching in $10m of his own money to buy shares.
The company's shares were up 5% at $245 in early trading after it unveiled the plans, which follow Musk's hint last week that a capital raise was imminent after the electric-car maker lost $700m in the first quarter.
Analysts have been predicting for months that Tesla would need to raise funds for its expansion plans, which include the construction of a factory in Shanghai, the upcoming Model Y SUV, and other projects.
Tesla said it would seek to raise $650m in new shares and $1.35bn in debt with underwriters having the option to buy an additional 15% of each offering, potentially raising the proceeds of the deals to $2.3bn.
Tesla expects capital expenditures of $2bn-$2.5bn in 2019 and about $2.5bn-$3bn annually for the next two fiscal years. It ended its first quarter with $2.2bn in cash.
"Both bulls and bears alike that we speak to see it as highly likely that Tesla will seek to raise equity capital sufficient in amount to quell questions about its potential financing needs," Morgan Stanley analysts wrote in a note dated April 30.
So far, Tesla has raised funds through bank loans, several rounds of equity sales, issued convertible notes, a $1.8bn junk bond sale, securitisation of its vehicle leases and solar asset-backed notes.
Goldman Sachs and Citigroup will manage the offering, with BofA Merrill Lynch, Deutsche Bank Securities, Morgan Stanley and Credit Suisse additional book-running managers.