Elon Musk reveals what he meant by his ‘funding secured’ tweet

  • 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 Saudi Arabia’s sovereign wealth fund had brought up taking Tesla private multiple times during the past 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 is defending his “funding secured” tweet.

In a company statement on Monday, Musk said Saudi Arabia’s sovereign wealth fund had brought up taking Tesla private multiple times for almost two years. The Saudi fund recently bought a 5% stake in Tesla. 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 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,” Musk said in his statement. “I understood from him that no other decision makers were needed and that they were eager to proceed.

“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.”

On Tuesday, Musk had tweeted: “Am considering taking Tesla private at $420. Funding secured.”

In his latest statement, Musk said he had announced his thoughts about taking the company private because he wanted to have “meaningful discussions” with large shareholders but couldn’t do so if he didn’t disclose his thinking 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 initially disclose details about where the funding would come from, nor did a statement from Musk on the company’s website posted later 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 he had been in communication with the managing director of the Saudi fund since sending the Tuesday tweet.

“He has expressed support for proceeding subject to financial and other due diligence and their internal review process for obtaining approvals,” Musk said. “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 that full details regarding the source of funding would be provided before anyone would be asked to decide on going private but that it was “premature” to share such information.

“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,” he said. “It is appropriate to complete those discussions before presenting a detailed proposal to an independent board committee.”

Musk said a deal to take Tesla private would be funded primarily by equity and not debt and that he expected 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,” Musk said. “The $420 buyout price would only be used for Tesla shareholders who do not remain with our company if it is private.”

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