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(BFM Bourse) – Tesla has announced plans to issue approximately $ 2 billion in new shares as part of a public offering. The electric vehicle manufacturer, which recorded an impressive stock market rally in the past two weeks, gives subscribers a 30-day option to buy up to $ 300 million in additional common stock. The title loose nearly 5% in electronic trading before the Stock Exchange on Wall Street.
Tesla is still taking the markets by surprise by announcing in a pre-market press release its intention to issue around $ 2 billion in shares as part of a capital increase. Assuming the banks fully exercise their option to purchase additional securities, the total gross proceeds of the offering would amount to approximately $ 2.3 billion before fees. Elon Musk’s group says it intends to use the net proceeds of the offer “to strengthen its balance sheet, as well as for the general needs of the business”. Tesla says it will give subscribers a 30-day option to buy up to $ 300 million in additional common stock.
Tesla founder and CEO will participate in the offering himself by buying up to $ 10 million in common stock, while Oracle billionaire Larry Ellison, co-founder of Tesla and administrator, will buy up to $ 1 million in common shares.
Goldman Sachs and Morgan Stanley were chosen to lead the transaction, alongside Barclays, Bank of America Securities, Citigroup, Credit Suisse, Deutsche Bank Securities and Wells Fargo Securities. Note that the French bank Société Générale has also been selected by Tesla to co-manage this public offering.
The announcement is relatively unwelcome by the market since the Teska share is yielding 4.3% before the stock market. At the close of Wednesday, the electric vehicle manufacturer was still valued at nearly $ 140 billion. The capital increase will therefore only be very dilutive, depending on the price to be used.
Quentin Soubranne – © 2020 BFM Bourse
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