Tesla raises $1.2 billion for Model 3 launch

18 March, 2017, 01:41 | Author: Elaine Woods

Tesla had been expected to raise capital since late a year ago, with the expectations gaining steam last month after Musk said the company could be "close to the edge" on cash needs.

Tesla Inc's $1.2 billion share and convertible debt offering on Friday demonstrates once again the unflagging ability by the luxury electric carmaker and its high-profile head, Elon Musk, to tap Wall Street for sorely needed cash.

Tesla had $3.39 billion in cash and cash equivalents at the end of 2016, but most comes from a May stock offering, cash from its SolarCity acquisition and almost $1 billion in draws on its credit facilities.

Tesla (TSLA) has announced new offerings of $250 million of common stock "and $750 million aggregate principal amount of convertible senior notes due in 2022 in concurrent underwritten registered public offerings", according to a new press release from the company.

According to a report by Fortune, Tesla shares opened at $264 today morning before dropping 0.7% and then rebounding.

Elon Musk recently attended the 2017 World Government Summit in Dubai, to launch Tesla in the UAE.

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Tesla also hasn't provided an update on the number of reservations taken for the Model 3, which is believed have sold out for the first year; advance reservations totaled 373,000. With that into consideration, the additional funding of up to $1.15 billion will definitely provide the company with an extra safety net as the mass production of the Model 3 begins this July.

Tesla is offering to sell 1,335,878 common shares at $262 per share, for a total of $350 million, the electric vehicle maker said in a SEC filing on Friday.

Tesla's capital raise was widely expected.

Worth noting, analysts have been expecting this move from Tesla for about a year now.

Several analysts forecasted a capital raise closer to $2.5 billion.

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