‘No question’ Saudi Arabia will help Tesla go private, says CEO Elon Musk

Musk has revealed he is in discussions with the Saudi sovereign wealth fund in a move that could remove restrictions like financial reports from the company

PUBLISHED : Monday, 13 August, 2018, 11:10pm
UPDATED : Tuesday, 14 August, 2018, 12:11am

Tesla chief executive Elon Musk has revealed that he is in talks with Saudi Arabia’s sovereign wealth fund and other investors to take the electric carmaker private, a week after he said on Twitter that financing for a deal had been “secured”.

“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,” Musk wrote in a blog post on Monday.

“It is appropriate to complete those discussions before presenting a detailed proposal to an independent board committee.”

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Musk said he had “no question” that the Saudis would finance such a transaction following a July 31 meeting. The transaction would be structured with equity so as not to burden Tesla with crushing debt, he added.

Musk’s surprise comments last week on Twitter about taking the company private sparked speculation that he would need to borrow massive amounts, a move that could free the company to operate without requirements for financial reports and other pressures of a publicly traded firm.

In his blog post on Monday, Musk said that reports that more than US$70 billion would be needed to take Tesla private “dramatically overstate the actual capital raise needed” because he expected some shareholders to remain invested in the company.

His Twitter post last week that he wanted to launch a buyout at US$420 a share “would only be used for Tesla shareholders who do not remain with our company if it is private”, Musk said in the blog.

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“My best estimate right now is that around two-thirds of shares owned by all current investors would roll over into a private Tesla.”

Musk added that the Saudi Arabian sovereign wealth fund “has approached me multiple times”, starting in early 2017, about taking Tesla private.

He said that the Saudis were interested “because of the important need to diversify away from oil” and added that the sovereign fund “has more than enough capital needed to execute on such a transaction”.

Tesla shares jumped one per cent at the opening of trading on Monday to US$359.28.

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California-based Tesla has become one of the most valuable carmakers on expectations that its electric models will disrupt the industry, although the company produced only slightly more than 100,000 vehicles last year.

The company has been struggling to boost production of its Model 3, which is less expensive than its first models and could help expand Tesla’s base.