Tesla Warns Cash Could Dry By 2017, Confirms Plans To Raise Funds
Tesla (TSLA) confirmed plans to raise cash as looks to acquire money-losing SolarCity (SCTY), finish development of its battery "Gigafactory," and launch the Model 3 at mainstream shipment volumes.
TESLA WARNS OF FUTURE CASH NEEDS: In a merger prospectus filed with the SEC this morning, Tesla stated: "As of June 30, Tesla had $3.25B in principal sources of liquidity available from its cash and cash equivalents, which included $2.76B of money market funds. Subsequent to June 30, Tesla has received notices of conversion from holders of approximately $422M in aggregate principal amount of Tesla's convertible senior notes due 2018... While Tesla expects that its current sources of liquidity will provide it with adequate liquidity based on its current plans through at least the end of the current fiscal year, Tesla is currently planning to raise additional funds by the end of this year, including through potential equity or debt offerings... Such additional funds would be used primarily for tooling, production equipment and construction of the Model 3 production lines, equipment to support cell production at Gigafactory, as well as new Tesla retail locations, service centers and Supercharger locations. Secondarily, if the merger with SolarCity is completed, the additional funds would also be used to support the additional capital needs of the combined company." Tesla first disclosed $411M in debt conversion notices on August 5.
PRICE ACTION: Tesla stock fell near $209 at the market open before rebounding, and falling again, near noon after CEO Elon Musk tweeted about "major improvements" coming to the carmaker's Autopilot system. Shares are now down 0.6% to $210.14.
Disclosure: None.