Published: Tue, August 28, 2018
Money | By Bruce West

Volkswagen was reportedly Tesla's backer to go private

Volkswagen was reportedly Tesla's backer to go private

Abandoning the plans, however, does not eliminate the concerns that led the SEC to launch a formal investigation into the company in the first place.

In the blog post, published without the fanfare of his earlier tweets, Musk said it had become clear to him that, while "there was more than enough funding" to take Tesla private, doing so would estrange numerous company's existing shareholders (and most ardent supporters of the company).

David Johnson, a managing partner at corporate restructuring firm Abraxas Group, told FOX Business that Musk had made a misstep firing the tweet off.

Tesla will stay public, Elon Musk said late on Friday, ending more than two weeks of speculation and calculation about how much a go-private deal would cost and who could be involved in it. In addition to its interest in Tesla, the Saudi sovereign wealth fund is considering an investment in aspiring US electric-car maker, Lucid Motors Inc., one of the people said.

The case is separate from lawsuits accusing Tesla and Musk of scheming to hurt short-sellers through Musk's August 7 tweets about taking the Palo Alto, California-based company private, and that funding had been "secured".

Yet no decisions had been made on how to advance as the advisers were still trying to understand the funding situation and whether taking the company private was even plausible, the people said. It quickly became clear that many of Tesla's investors would not have been able to follow, as internal investment regulation would have tied quite a few hands.

The next measure of how Tesla bounces back may come in early October, when it will report third-quarter production and deliveries. It's created a new layer of questions for investors.

"We see the company raising $2 billion in 4Q18, through convertible debt, which may prove a challenge if there still is an ongoing SEC case open", Cowen and Co analyst Jeffrey Osborne wrote in a client note.

One of Tesla's biggest challenges is ramping up production of its latest vehicle, the Model 3, which is critical to its profitability goals. People close to Musk have said that he might have been "overly simplistic" in his thinking, the New York Times suggests.

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