Elon Musk defended his unusual move to announce by tweet that he intends to take Tesla private.
In a blog post on Monday the chief executive of Tesla said that the Saudi Arabian sovereign wealth fund offered to fund taking the all-electric automaker private during a meeting on July 31. “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,” Musk said. “This is why I referred to ‘funding secured’ in the August 7th announcement.”
Musk added that he has continued talks with the managing director of the Saudi fund who wishes to move forward with the process.
Following Musk’s bold announcement last week that he would take the company private at $420 per share, Tesla’s stock initially shot up 11 percent.
Musk’s tweet stating that he guaranteed funds for the proposed buyout sparked two lawsuits and a preliminary probe by the Securities and Exchange Commission, which is seeking proof that Musk had in fact secured financial backing. In a blog post that further presses the case that Tesla should go private, Musk attempted to address his critics who have attacked his tweet and questioned whether he may have engaged in stock manipulation or securities fraud.
“The only way I could have meaningful discussions with our largest shareholders was to be completely forthcoming with them about my desire to take the company private,” he said in the blog post. “However, it wouldn’t be right to share information about going private with just our largest investors without sharing the same information with all investors at the same time. As a result, it was clear to me that the right thing to do was announce my intentions publicly."
About two-thirds of Tesla’s shareholders would remain with the company through its transition, Musk estimated, which reduces the amount of capital needed for the exit from public markets. He said the buyout price of $420 would only apply to those shareholders who don’t want to stay if Tesla goes private.
Musk said it would be “premature” to present a full proposal, including details about the source of the funding. In addition to working with the Saudi investment offer, Musk is vying to include other backers to give the company a “broad investor base,” he said. If Musk moves forward with the plan, he said he would present the proposal to an independent board committee, which is being formed. The plan would ultimately need to win the committee’s blessing, regulatory approval and a shareholder vote, he said.