Published: Tue, August 14, 2018
Finance | By Loren Pratt

Musk says Silver Lake, Goldman advising on taking Tesla private

Musk says Silver Lake, Goldman advising on taking Tesla private

Elon Musk has confirmed plans to take Tesla private with the backing of a Saudi Arabian sovereign wealth fund.

He has given more details - including saying he is working with Goldman Sachs and buyout firm Silver Lake - but is yet to convince Wall Street analysts and investors that he can find the billions needed to complete the deal.

A link between Musk's tweet and the Saudi involvement was soon made as the CEO's announcement ended with the "funding secured" phrase.

Tesla's board disclosed on August 8 that Musk had held talks with the directors in the previous week on taking the company private. Musk wrote that he tweeted the plan August 7 after "it was clear to me that the right thing to do was announce my intentions publicly".

"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", Musk wrote.

Musk said on Monday he expects two-thirds of existing Tesla shareholders would roll over into a private company, but said he was in talks with major shareholders about his proposal.

FILE PHOTO: A Tesla sales and service center is shown in Costa Mesa, California, U.S., June 28, 2018.

On Monday, he said financing had been discussed with Saudi Arabia. The PIF board is headed by the Crown Prince Mohammed bin Salman. Musk says he has stayed in contact with the Saudi fund and has been reaching out to other investors ever since.

"This supports the idea that there was reasonable basis on which to believe that funding could be secured but it doesn't eliminate the concern with respect to whether "secured" was an overstatement and only underscores how inappropriate Twitter was for such a disclosure", said Zachary Fallon, a former SEC attorney and principal at law firm Blakemore Fallon.

Musk said he anticipates that most Tesla shareholders would remain invested in the company if it were to go private, and that reports of a $70 billion buyout are inflated.

He added that most capital for the deal would come from equity and it would not be "wise" to burden the company with added debt. With little commentary about the financing after that, it prompted uproar including two class action lawsuits and a potential Securities and Exchange Commission inquiry.

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