Tesla Offers $250 Million Of Common Stock + $750 Million Convertible Senior Notes

Tesla (TSLA) has announced new offerings of $250 million of common stock “and $750 million aggregate principal amount of convertible senior notes due in 2022 in concurrent underwritten registered public offerings,” according to a new press release from the company.

As part of this, Tesla has reportedly granted the underwriters a 30-day option to buy up to 15% more of each offering.

Tesla’s CEO Elon Musk will be participating, with the purchase of an additional $25 million of common stock, going by the press release.

The press release continues: “The aggregate gross proceeds of the offerings, including the options granted to the underwriters, is expected to be approximately $1.15 billion. … The notes in this offering will be convertible into cash and/or shares of Tesla’s common stock at Tesla’s election. The interest rate, conversion price and other terms of the notes are to be determined. With respect to the notes, Tesla intends to enter into convertible note hedge transactions and warrant transactions to limit dilution of its common stock. In connection with establishing their initial hedge of the convertible note hedge and warrant transactions, the hedge counterparties or their affiliates expect to enter into various derivative transactions with respect to Tesla’s common stock concurrently with or shortly after the pricing of the notes, including with certain investors in the notes.”

The lead book-running managers for the offering are: Goldman Sachs, Deutsche Bank Securities, Morgan Stanley, and Citigroup. The additional book-running managers are: Barclays, Merrill Lynch, BofA, and Credit Suisse.

Tesla will be utilizing the new funds to “strengthen its balance sheet and further reduce any risks associated with the rapid scaling of its business due to the launch of Model 3,” in addition to regular operational purposes.

Tesla CEO Elon Musk stated on conference calls in the past year that Tesla didn’t need to raise more money for the Model 3 launch, but that it would probably be sensible to do so. That last note about strengthening the balance sheet and reducing risk seems to just be a reiteration of those statements. Nonetheless, we can probably make a very safe bet on how some “investors” will respond.