Elon Musk reveals what he meant by his 'funding secured' tweet

Cadie Thompson

Aug 13, 2018, 20:15 IST

Elon Musk reveals what he meant by his 'funding secured' tweet

Noah Berger / AP Photo

Elon Musk said in a company statement on Monday morning that he thought tweeting about possibly taking Tesla private was the "right and fair thing to do."
Musk said that the Saudi Arabian sovereign wealth fund had brought up taking Tesla private multiple time during the last two years.
Musk said he met with the fund's managing director on July 31 and left that meeting confident that a deal to take Tesla private with the fund could be done.

Elon Musk defended his "funding secured" tweet in a company statement on Monday.

Musk said the Saudi Arabian sovereign wealth fund had brought up taking Tesla private multiple times for almost two years. The Saudi fund recently bought a 5% stake in the company. Musk said he met with the fund's managing director again on July 31 and left that meeting confident that a deal to take Tesla private would close.

"During the meeting, the Managing Director of the fund expressed regret that I had not moved forward previously on a going private transaction with them, and he strongly expressed his support for funding a going private transaction for Tesla at this time. I understood from him that no other decision makers were needed and that they were eager to proceed," Musk said in his statement.

"I left the July 31st meeting with no question that a deal with the Saudi sovereign fund could be closed, and that it was just a matter of getting the process moving. This is why I referred to 'funding secured' in the August 7th announcement."

Last Tuesday, Musk tweeted, "Am considering taking Tesla private at $420. Funding secured."

Musk said that he made the announcement about wanting to take the company private because he wanted to have "meaningful discussions" with large shareholders, but couldn't do so if he didn't disclose his desire for the company to all shareholders.

"I made the announcement last Tuesday because I felt it was the right and fair thing to do so that all investors had the same information at the same time," Musk said.

Musk did not disclose details about where the funding would come from, nor did a statement from Musk on the company's website posted later on Tuesday have any details about where the money would come from.

This sparked confusion and raised questions about whether funding was really secured.

In his statement on Monday, Musk said that following his August 7 tweet, he has been in communication with the managing director of the Saudi fund.

"He has expressed support for proceeding subject to financial and other due diligence and their internal review process for obtaining approvals. He has also asked for additional details on how the company would be taken private, including any required percentages and any regulatory requirements," Musk said.

Musk said that full details regarding the source of funding will be provided before anyone is asked to decide on going private, but that sharing information regarding that now would be "premature."

"I continue to have discussions with the Saudi fund, and I also am having discussions with a number of other investors, which is something that I always planned to do since I would like for Tesla to continue to have a broad investor base. It is appropriate to complete those discussions before presenting a detailed proposal to an independent board committee," he said.

Musk said that a deal to take Tesla private would be primarily funded by equity and not debt, and that he expects two-thirds of shares owned by current investors to remain as part of a private Tesla.

"Therefore, reports that more than $70B would be needed to take Tesla private dramatically overstate the actual capital raise needed. The $420 buyout price would only be used for Tesla shareholders who do not remain with our company if it is private," Musk said.