Tesla Board Seeks More Info on Musk’s Proposal - Sources

Tesla Inc’s board hasn’t been given an elaborate financing plan from chief executive officer Elon Musk, and members are now seeking more information over the CEO’s plan to take the US electric car maker private via a proposed $72 billion deal, according to people familiar with the matter.

According to the sources, Tesla’s board had already conducted a number of discussions about the CEO’s proposal, which was first announced publicly on Tuesday.  However, the board has not yet received detailed information over the funding. 

Tesla declined to issue a statement.

Elon Musk, who is a 47-year-old investor and engineer, made waves on the financial markets on Tuesday as he revealed on Twitter that he was thinking of a take-private deal for Tesla.  The company is an auto manufacturing pioneer that successfully developed the world’s first ever premium all-electric sedan car.

The revelation came after Musk’s months-long battle against investors, journalists, and analysts, with the central issue being whether Tesla could turn a profit and produce enough mass market model of its flagship electric vehicle to meet demand.

Musk tweeted on Tuesday that he had secured the financing for the deal.  However, he did not provide further details.

There were much speculation among shareholders and investment bankers about who could fund a deal of that size, given especially the fact that the company’s bonds are already rated junk by various rating agencies.

According to a report on Wednesday, the US Securities and Exchange Commission has communicated with Tesla to ask about Musk’s announcement on Twitter, in which the CEO also asserted that the funding for his proposed deal was “secured.”

The news that the board is seeking more details from Musk could spur new questions about his plans of financing the deal with his proposed price of $420 each share.

After increasing at the close on Tuesday at $379.57, Tesla stocks have since dropped about 7 percent to finish trading at $352.45 on Thursday, in light of investor scrutiny over the deal’s prospects.

In a statement last Wednesday, the board stated that its discussion with Musk “addressed the funding” for the deal, but did not provide more details.

The board is expecting to come up with a decision on whether to launch a formal review of Musk’s proposal in the coming days.  It is also speaking to investment bankers about employing financial advisers to help it in its review in such a situation, according to sources.

If the board indeed launches a formal review of the proposal, Musk would have to recuse himself.  If he doesn’t, a special board committee would have to be formed, according to sources.

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