Tesla had VW funding lined up to go private, report says

Dwayne Harmon
August 28, 2018

Investors on Monday will render their verdict on Tesla Chief Executive Elon Musk's decision to abandon a proposed $72 billion buyout to take the luxury electric vehicle maker private.

Investors now must brace for another potential wild ride when USA trading opens Monday, while regulators and lawyers autopsy what happened to a deal potentially valued at US$82 billion and Tesla's board is left with a brilliant but exhausted and erratic chief executive officer.

Explaining his reversal in a late-night blog post on Friday, the billionaire CEO said that taking the company private "would be even more time-consuming and distracting than initially anticipated", and that "most of Tesla's existing shareholders believe we are better off as a public company".

The following Securities and Exchange Commission (SEC) investigation didn't help Elon's cause, further jeopardizing the financial future of the company. Experts say it all could wind up with Tesla exposed to a fine for misleading investors.

The Saudis were unhappy about Musk detailing his talks with the Kingdom's sovereign wealth fund in an August 13 blog post, where the CEO justified his earlier tweet about "funding secured" on their interest, the people said. Could the SEC investigation have played a role?

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The case is Wochos v Tesla Inc et al, U.S. District Court, Northern District of California, No. 17-05828.

In this week's Counting the Cost, Al Jazeera asks Arash Massoudi, the Financial Times editor who broke the story of Saudi Arabia's stake in Tesla, what may have been behind Musk's tweets and earlier hints that his company was poised to organise one of the biggest leveraged buy-outs in history. "Although the majority of shareholders I spoke to said they would remain with Tesla if we went private, the sentiment, in a nutshell, was "please don't do this".

Tesla also said on Sunday it was not searching for a chief operating officer - a No. 2 executive that critics claim Musk badly needs, as his micromanaging ways have lately led to him to sleep on the floor of Tesla's factory in Fremont, Calif. It finally became clear, by Musk's own admission, that it was not.

Musk also said the company "absolutely must stay focused on ramping Model 3 and becoming profitable".

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