Tesla Inc’s Board Questioning CEO Elon Musk Financing Plan because they have not yet received any detailed about this famous financing plan, indeed the board is seeking more information to understand how the CEO Elon Musk will proceed to take the U.S. electric car maker private in a proposed deal worth $72 billion.
Tesla’s board raised various questions from multiple discussions about Musk’s proposal since the information became public on Tuesday, under a financial pressure from investors the publicly declared it has not yet received specific information on who will provide the funding, one of the sources said.
However Elon Musk, a 47-year-old entrepreneur, and an engineer, stunned financial markets on Tuesday, when he revealed on Twitter he was considering a take-private deal for Tesla, an auto manufacturing pioneer that developed the world’s first ever premium all-electric sedan car.
Musk said in a tweet on Tuesday that he had secured financing for the deal, but he did not publicly provide further details.
Speculation has swirled among shareholders and investment bankers about who could fund a deal of that size, especially given that the company’s bonds are already rated junk by credit rating agencies.
The U.S. Securities and Exchange Commission has contacted Tesla to ask about CEO Elon Musk assertion on Twitter that funding for his proposed deal was “secured”, the Wall Street Journal reported on Wednesday.
The revelation that the board is seeking more details from Musk could raise new questions about how he plans to finance the deal at his proposed price of $420 per share.
After jumping to close at $379.57 on Tuesday, Tesla shares have since fallen about 7 percent to end trading at $352.45 on Thursday, amid investor skepticism over the deal’s prospects.
In a statement on Wednesday, Tesla’s board said its discussion with Musk “addressed the funding” for the deal, without offering more details.
The board expects to make a decision on whether to launch a formal review of Musk’s proposal in the coming days and is speaking to investment bankers about hiring financial advisers to assist it in its review in such scenario, the sources said.
If the board launches a formal review of CEO Elon Musk bid, he would have to recuse himself, or a special board committee would have to be formed, according to the sources, who requested anonymity because the deliberations are confidential.
The exact information that Musk communicated to the board about his plan could not be learned.
The company faces a make-or-break moment in its eight-year history as a public company as competition from European automakers is poised to intensify with new electric vehicles from Audi and Jaguar, with more rivals entering the market next year.
Tesla is still working its way out of what Musk called “production hell” at its home factory in Fremont, California, where a series of manufacturing challenges delayed the ramp-up of production of its new Model 3 sedan on which the company’s profitability rests.
Meanwhile, Tesla has announced plans to build a factory in Shanghai, China, and another in Europe, but details are scarce and funding unknown.
