Tesla is issuing new shares and debts to repay US loan faster

Article by Anita Panait, on May 16, 2013

Tesla Motors Inc. is issuing 2.7 million new shares as well as convertible senior notes as part of its bid to repay a $465-million loan taken out from the U.S. Energy Department faster than planned, according to a US regulatory filing made by the carmaker. The proceeds from the sale of the new shares – worth $229 million at today's $84.84 closing price – as well as from the sale of convertible senior notes due in 2018 worth $450 million will be used to repay the federal loan and interest.

The carmaker said that the Energy Department has already agreed to the modified terms. Tesla's move to issue new shares comes after the carmaker posted last week its first quarterly profit, resulting to a record-breaking surge of its shares.

The carmaker disclosed in March 2013 an arrangement to repay its $465 million U.S. loan in five years, rather than the original 10-year period. The carmakers revealed last week that it repaid around $13 million of the loan in the first quarter of 2013.

Tesla chief executive Elon Musk is intending to buy $100 million of shares of common stock at the same public offering price, acquiring around $45 million in the public sale and about $55 million in a private placement.

Tesla is expecting to raise about $830 million in fresh funds from the issuance of the new shares and convertible senior notes.

Model S is a breakthrough in automotive engineering, being the first ever sedan that is fully electric. It combines safety, efficiency, and performance, and has reset expectations for the 21st century car with the highest safety ratings possible, over-the-air software updates, and the longest range for any electric car.

Tesla Model S battery was built on Tesla’s platform and it gives the car a very low center of gravity, thanks to the fact that it was placed on the floor. This also reduces the risk of rollover and enhances performance and handling at the same time. With the absence of an engine, the car has a crumple zone that is a lot larger compared with other performance sedans, enabling it to absorb the energy in case of front-end impact.

Moreover, the Tesla Model S is a very safe car; in fact, one of the safest in the world. The car's NHTSA and Euro NCAP five-star safety rating proves this safety record. It has also set a record for having the lowest probability of passenger injury when it was tested in the U.S.

This safety has a lot to do with the unique electric drivetrain sitting beneath the car. It also has standard active safety features that include collision warning, automatic emergency braking, lane departure warning, and blind spot detection. There are also optional convenience features such as autosteer, autopark, and traffic-aware cruise control.

Topics: tesla

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