Tesla just raised $1.2 billion ahead of its Model 3 launch
The company, led by Elon Musk, said it sold 1.3 million common shares at $262 apiece to raise $350 million and that it raised another $850 million though the sale of convertible senior notes due 2022.
The electric car company said on Wednesday it planned to sell $250 million worth of stock and $750 million in notes.Tesla had been expected to raise capital since late last year, with the expectations gaining steam last month after Musk said the company could be "close to the edge" on cash needs.
Musk had Tesla was considering a number of options, including raising capital, to reduce risk ahead of the upcoming Model 3 sedan, the $35,000 mass-market vehicle on which the company's future profitability hinges.
Tesla has said it will produce 5,000 Model 3 sedans a week in the fourth-quarter and will ramp production up to 10,000 cars per week at some point in 2018.
Pressure is on for Tesla to meet its Model 3 deadline. Tesla's Model S was expected to roll out in 2010, but was delayed to mid-2011. The Model X launched in October 2015 after suffering three years worth of delays.
Tesla has received roughly 400,000 pre-orders for the Model 3 and must contend with Model S and Model X production on top of that. The automaker began preparing its Fremont factory for Model 3 production in February.Tesla said Musk, already the company's top shareholder with a stake of about 21% as of December, bought 95,420 common shares for $25 million in the latest stock sale.
The 1.3 million shares sold represents about 0.8% of Tesla's outstanding shares as of Dec. 31.
(Reporting by Rishika Sadam in Bengaluru; Editing by Savio D'Souza)