Tesla raises $1.2 billion for Model 3 launch

Lucy Hill
March 18, 2017

A capital raise by Tesla has been anticipated since late previous year, gaining steam last month after Chief Executive Elon Musk said the company could be "close to the edge" on cash needs.

Tesla has raised $1.2 billion in new cash from sale of common shares, and convertible notes that come due in 2022.

The company is offering Dollars 250 million of common stock and USD 750 million of convertible senior notes due in 2022.

Elon Musk and Tesla have raised $1.2 billion in preparation of the launch the new Model 3.

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Tesla chief executive Elon Musk has indicated his preliminary interest in buying up to 95,420 shares of Tesla common stock for a purchase price of around $25 million in this offering at the public offering price, the company said.

The 1.3 million in shares sold represent about 0.8 percent of Tesla's total outstanding shares, as recently as December 31. With respect to the notes, Tesla intends to enter into convertible note hedge transactions and warrant transactions to limit dilution of its common stock. The electric vehicle manufacturer is also going to offer convertible senior notes worth US$750 million. In a note to investors, Colin said that the Palo Alto Company could opt to raise more funds if production and delivery of Model 3 is delayed.

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. Meanwhile, Tesla started 2017 with $3.4 billion of cash and $900 million of incremental liquidity from financing lines coming from the SolarCity acquisition. And that proved right today when the automaker announced that it would be raising $1.13 billion in capital through equity and debt financing to reduce the risks associated with Model 3.

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