Tesla to raise US$1.15 billion ahead of Model 3 launch.
Tesla Inc said it expects to raise about $1.15 billion from a stock and senior notes offering, an infusion of needed capital as the electric auto maker enters pre-production of its upcoming Model 3 electric sedan. In total the company raised about 20% more than it anticipated.
Tesla (TSLA) has announced new offerings of $250 million of common stock "and $750 million aggregate principal amount of convertible senior notes due in 2022 in concurrent underwritten registered public offerings", according to a new press release from the company.
Tesla is offering to sell 1,335,878 common shares at $262 per share, for a total of $350 million, the electric vehicle maker said in a SEC filing on Friday.
Tesla's shares rose about 1 percent on Friday.
The capital raise removed "an overhang on the stock", in the eyes of investors, wrote analyst Jamie Albertine of Consumer Edge Research, given uncertainty over how Tesla would meet its robust spending needs, from the Model 3 to its massive battery factory in Nevada.
So, this cash raise is more with an eye towards making preparations for contingencies and offset risk for shareholders, as compared to any real, urgent need on Tesla's part.
CEO Elon Musk participated in the stock offering and bought 95,420 shares for nearly exactly $25 million.
No matter how one chooses to view the convertible offering, the fact that Tesla is still (second time in a year) able to tap into the debt/quity markets is testament to how far ahead of the competition Tesla really is.
Tesla burned through $970 million in the fourth quarter and expects as much as $2.5 billion in expenditures during the first half of 2017.
The automaker is planning to raise more than $1 billion in capital to help bring the vehicle to market.