Tesla’s Board Has Met Several Times to Discuss Going-Private Proposal

Danny Moloshok  Reuters

The brief statement by six of the nine board directors said that the discussions about taking the company private had also "addressed the funding for this to occur".

Tesla Inc.'s board confirmed it knew last week about Elon Musk's proposal to take the electric-car maker private, adding credence to the idea that this was more than a spur-of-the-moment whim from the notoriously impulsive billionaire.

Rather, it was attributed to Brad Buss, Robyn Denholm, Ira Ehrenpreis, Antonio Gracias, Linda Johnson Rice, and James Murdoch.

In the last week, Tesla's board has met "several times" to discuss Musk's proposal and "is taking the appropriate next steps to evaluate this".

The most obvious equity partners for Musk would be a sovereign wealth fund such as Saudi Arabia's Public Investment Fund (PIF), which sources said on Tuesday had taken a stake of just below 5 percent in Tesla, or a major technology investment fund such as SoftBank Group Corp's Vision Fund, bankers said.

Elon Musk's tweets early on Tuesday caused plenty of speculation and controversy.

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Tesla shares fell as much as 3.4 per cent to US$366.52 before the start of regular trading, though they pared declines after the board statement.

But as the dust settles on Musk's latest Twitter escapade, questions remain over whether the Tesla chief executive broke SEC guidelines by tweeting the news. The company declined to comment beyond pointing to an all-employee email sent Tuesday by Musk.

Neither Elon nor Tesla has said yet where it's getting the money to go private. If the statement regarding having secured the funding for the move later proves unachievable, then Musk could be in hot water with regulators over the statements that he first made on Twitter. That last part is important, because Tesla's going to need a lot of it. Musk's money-losing and cash-burning company is an unlikely candidate for debt investors to be willing to help go private. "And if you stay as a shareholder you get less information than before and you depend more and more on Elon Musk".

Harvey Pitt, a former chair of the Securities and Exchange Commission, said Musk's asserting a final sale price and that funding was "secured" opened him to potential charges of stock manipulation or securities fraud.

Several members of Tesla's board issued a joint statement on the company's investor-relations site. Company share prices, particularly in deals as giant as this one, are nearly always decided by corporate executives, board members or consultants who review market data and optimize for maximum value. Tesla's other board members are Musk, his brother Kimbal Musk and venture capitalist Steve Jurvetson.

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