Tesla's goal is to raise about $ 500 million, through the sale of shares

Posted on 8/14/2015 10:53:16 AM

Electric car maker Tesla Motors Inc. said it plans to raise about $ 500 million through the sale of 2.1 million shares.

CEO Elon Musk has expressed interest in buying about 84,000 shares for about $ 20 million in the deal, the company said in a regulatory filing today.

Tesla shares rose 1.8 percent to close the day at $ 242.51. Tesla said he took the shares are sold to Wednesday's closing price of $ 238.17.

Musk is already the largest shareholder in the company with 22,25 percent stake.

Tesla had 127.1 million shares outstanding at July 30.

The offer comes a week after Mitsubishi head rotor 149701-0520 reported a bigger quarterly loss and said it could raise more money to offset heavy spending on increasing production. Tesla burned through $ 359 million in cash during the second quarter.

Until Wednesday's close, shares of Tesla had fallen 12 percent since August 5, when the company reported its results.

The underwriters have a 30-day option to purchase up to $ 75 million additional shares, Tesla said.

The company said it intends to use the proceeds to develop its energy business, your next project Model 3, the gigafactory battery and other general purposes.

The offer gives a little more of a cash cushion for the manufacturer of smaller and younger cars traded in the United States, which is facing huge capital expenditure to expand globally and to triple its vehicle lineup.

'Risk reduction'

Musk said last week that the company may increase the share capital "as a measure of risk reduction." Sales incentive brand on July 29 and August 5 was first introduced, he said deliveries could fall 10 percent below the original target if suppliers can 't deliver parts needed in time.

Tesla raised $ 226 million in its initial public offering in June 2010, the first IPO for an automaker in the United States in half a century.

In May 2013, the company raised $ 1.08 billion in stock offerings and debt, a move that allowed him to pay his $ 465 million Department of Energy loan nine years ahead of schedule. In February 2014, Tesla's borrowed $ 2,300 million in convertible debt to help finance the call gigafactory being built near Reno, Nevada. In June, Tesla received a credit line of up to US $ 750 million.

The lack of benefit

Musk has been honest about Tesla capital expenditures and lack of profitability. The increase in battery production and development of new models require billions in investments and delay the consistent profitability.

In January, Musk said the company could become profitable on a net basis by 2020, when annual sales reach 500,000.

During the fourth quarter earnings call in February, Musk said Tesla was "going to spend huge amounts of money on capital expenditures." After the report first quarter results in May, Tesla said it had $ 1.51 billion in cash and cash equivalents as of March 31, down from $ 1.91 billion three months ago and below $ 2,600 million a year earlier, prompting analyst Adam Jonas of Morgan Stanley to characterize cash burn Tesla as "tearing". Tesla reported cash and cash equivalents of $ 1,150 million at the end of the second quarter.

While net income remains years away, CFO Deepak Ahuja said the company will become, probably near the end of this year in free cash flow positive and "definitely" for the first quarter of 2016 as the Model X SUV production speeds.

"Clearly, raising capital are made. It is only $ 500 million, and it will take to bring the Model 3 to market," Andrea James Dougherty & Co. analyst, said in an interview today. "But this leads them through free cash flow positive in" the fourth quarter.

Underwriters for the latest offering are Goldman Sachs Group Inc., Morgan Stanley, JPMorgan Chase & Co., Deutsche Bank AG, Bank of America Corp. and Wells Fargo & Co., according to the presentation.

The company, based in Palo Alto, has a market valuation of more than $ 30 billion.

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