Tesla Motors Inc. said it will issue 2,703,027 shares of common stock and $450 million aggregate principal amount of convertible senior notes due 2018 in concurrent underwritten registered public offerings.
In addition, Tesla Motors has granted the underwriters a 30-day option to purchase up to an additional 405,454 shares of common stock and $67.5 million in aggregate principal amount of the notes.
Elon Musk, Tesla’s Chief Executive Officer and cofounder, intends to purchase shares of common stock at the same public offering price for an aggregate purchase price of $100 million. Of this amount, approximately $45 million would be purchased in the common stock offering, and approximately $55 million would be purchased directly from Tesla in a subsequent private placement due to the waiting period requirements of the Hart-Scott-Rodino Act.
Tesla intends to use the net proceeds from the offerings to prepay Tesla’s loan from the United States Department of Energy, pay the cost of convertible note hedge transactions and for general corporate purposes.
In 2009, Tesla won a $465 million U.S. loan — one of five awarded under the $25 billion Advanced Technology Vehicle Manufacturing Program — but vowed to pay if off years early. Tesla expects to raise $830 million and will prepay Tesla’s outstanding U.S. loan.
The notes will be convertible into cash and, if applicable, shares of Tesla’s common stock. The interest rate, conversion price and other terms of the notes are to be determined.
In connection with the offering of the notes, Tesla intends to enter into convertible note hedge transactions and warrant transactions which are generally expected to prevent dilution up to 100% over the offering stock price. In connection with establishing their initial hedge of the convertible note hedge and warrant transactions, the hedge counterparties or their affiliates expect to enter into various derivative transactions with respect to our common stock concurrently with or shortly after the pricing of the notes, including with certain investors in the notes.
Goldman, Sachs & Co. is acting as sole book-running manager for the offering of common stock. Goldman, Sachs & Co., Morgan Stanley and J.P. Morgan are acting as joint book-running managers for the notes offering.
