Elon Musk could face civil and criminal penalties if it is found he didn't secure financing at the time of his tweet about taking Tesla private, the former SEC chair says. t.co/0MPJPEqMl0
— CNBC (@CNBC) August 8, 2018
Elon Musk could face civil and criminal penalties if it’s found that he didn’t secure financing at the time of his tweet about taking Tesla private, former SEC chair Harvey Pitt says.
“If you make a false statement in connection with the trading of securities, you run the risk of both having to pay for the damages you caused and also you run the risk of a criminal prosecution,” he says.
$TSLA dropping a buck every minute that an 8-K isn't filed
— Quoth the Raven (@QTRResearch) August 8, 2018
Musk's LBO Plan Triggers Furious Controversy, And One Burning Question t.co/uxoomOJRhz
— zerohedge (@zerohedge) August 8, 2018
Update: almost one day after the Musk tweet, Tesla Board members Brad Buss, Robyn Denholm, Ira Ehrenpreis, Antonio Gracias, Linda Johnson Rice, and James Murdoch, finally issued a statement:
Last week, Elon opened a discussion with the board about taking the company private. This included discussion as to how being private could better serve Tesla’s long-term interests, and also addressed the funding for this to occur. The board has met several times over the last week and is taking the appropriate next steps to evaluate this.
It was not immediately clear just what the board means when it says it will “address the funding” for the deal to occur if, as Musk said previously, it was already secured.
* * *
No company has the ability to twist a wedge of discord as deeply and mercilessly between its fanatical fan base and its rabid skeptics and shorts as Tesla, and one day after Elon Musk’s shocking, bizarre Tesla “going private” declaration on twitter, coupled with a vow that “funding is secured”, the disagreement has, predictably, never been greater.
On one hand, there are those who say the deal can happen, and not only that but it would eventually take place at a higher price than the stated $420/share, a valuation of $82 billion which would make it the biggest LBO in history, far greater than the ill-fated (and subsequently bankrupt) TXU which marked the peak of the last financial bubble. Keep in mind TXU had gobs of positive free cash flow when it was LBOed over a decade ago; Tesla has lost money on an operating basis every year since going public and has been burning through billions of dollars.
This morning, Baird analyst, and Tesla cheerleader, Ben Kallo said that Tesla holders would likely push for a go-private price above the $420 per share that Musk suggested, and the stock price may top that mark as investors demand a higher premium and shorts cover positions. To be sure, with the stock trading over $50 below the LBO price, the market clearly sees “problems” with the deal as it is structure.
Dear financial media. Simple math for you. Let’s imagine there’s $30B of dumb debt out there, and that’s enough to get this $TSLA ‘deal’ done. Assume 7% yield.
$30B*0.07/4 = $525MM addition interest per quarter.
Put that in your models for fun…
Think before you print, ok?
— TeslaCharts (@TeslaCharts) August 8, 2018