6 ms·

How Elon Musk might make $920M in Tesla debt go away

44 points by chollida1 8y ago

mnw21cam 8y ago
Web site blocked.
- traderjane 8y ago
  I use Firefox with ad-blockers and it worked just fine for me.
  - danso 8y ago
    The LATimes (formerly of Tribune) and other Tribune-media properties block EU traffic because of GDPR: https://digiday.com/media/u-s-sites-continue-block-european-visitors-post-gdpr/ https://digiday.com/media/u-s-sites-continue-block-european-...
    - rcMgD2BwE72F 8y ago
      Because of GDPR, or because they do not respect people's basic rights to privacy?
      - garmaine 8y ago
        Don’t do that.
        rcMgD2BwE72F 8y ago
        In fact, I can't say anything on this because they don't even let me read their privacy policy. They've simply blocked all European visitors since last May (!). FYI, here's how NPR.org comply with GDPR: https://imgur.com/a/32xAbpI https://imgur.com/a/32xAbpI. It's great. Since last May.
        danso 8y ago
        NPR has had its text-only domain (text.npr.org) since 2005: https://www.poynter.org/news/text-only-news-sites-are-slowly-making-comeback-heres-why https://www.poynter.org/news/text-only-news-sites-are-slowly... I agree it's a good practice, and one not unrelated to how NPR is one of the few news orgs with a good API [0]. Tribune Media, meanwhile, has had a different saga since 2005 to put it lightly, and it includes the industry's most epic failed mergers and reorgs [1]. I'm not privy to their internal development process, but I'm willing to bet that their lack of a GDPR site is much more about being unable to do so due to corporate/financial chaos, and less so because of a purported hatred toward "people's basic rights to privacy". [0] https://www.npr.org/api/index https://www.npr.org/api/index [1] https://www.chicagotribune.com/ct-history-of-tribune-ownership-saga-20160204-htmlstory.html https://www.chicagotribune.com/ct-history-of-tribune-ownersh...
        cronix 8y ago
        Countries/Unions are free to make new regulatory laws. It doesn't mean everyone will, or necessarily should, play along. I don't have a problem with companies changing where they decide to do business based on new laws that pop up. Maybe the EU just isn't a large enough part of LA Times revenue to justify the cost of implementing GDPR. Regardless of the reason, it's their choice, just like it's the EU's choice to pass the regulations. What's the issue?
        true_religion 8y ago
        NPR is a national news source. Thr LA times is just a local paper, one of about a half dozen the Tribune owns. I do not think they ever aspired to have a global prescence, much less actively serve the EU market. Whats wrong with a local press deciding to stay local, and only comply with local laws?
      - Cantonese 8y ago
        Maybe because they think cookie warnings are ridiculous.
- frgtpsswrdlame 8y ago
  http://outline.com/http://www.latimes.com/business/autos/la-fi-hy-tesla-convertible-bonds-20181115-story.html http://outline.com/http://www.latimes.com/business/autos/la-...
- elektor 8y ago
  https://outline.com/SzKTuJ https://outline.com/SzKTuJ Here you go.
lgrebe 8y ago
Blocked in EU
softbuilder 8y ago
Tl;dr - that debt is in convertible bonds and if the stock goes up a few bucks most holders will presumably opt to convert to owning Tesla stock. Doesn't that just dilute the stock?
- tedsanders 8y ago
  Yes.
  - rcMgD2BwE72F 8y ago
    Which is why Musk said repeatedly that they will reimburse the debt with cash flow.
    - cagenut 8y ago
      musk says a lot of things. it will be interesting to see how it plays out with a former-cfo chairperson.
      - rcMgD2BwE72F 8y ago
        It's best to review Musk's goals over the longest term possible, because who cares about being late for a few of the objectives if they are widely exceeded soon after the deadline? I invite you to re-read the early presentations for the Model S and Gigafactory. Question: of the goals that have been achieved and those who haven't, which are the most important? And for the less important, are these delays interfering with Tesla's mission or just a temporary postponement to further focus on things that matter (e.g displacing oil and disrupting fossil fuel investment plans)?
- rtkwe 8y ago
  Only if they have to issue new stock to cover the conversion. I imagine the company has these shares in reserve.
  - bryanlarsen 8y ago
rcMgD2BwE72F 8y ago
>If conditions are met, and all bondholders convert, Tesla would suddenly gain $920 million worth of much-needed financial flexibility. To spark a conversion, Tesla needs to boost its stock price to $359.87 or higher at some point in the three-month period between Dec. 1 and Feb. 28. The higher the price goes, the more likely holders will convert. Funny, the strike price ($359.87) is already below the current stock price (360.47) >(Under the bond agreement, Tesla can choose to pay the bonds off in cash, rather than exchange debt for stock. But given its cash needs, that’s highly unlikely.) Elon already said he intends to paid back the debt with cash rather than convert. They confirmed on the last earning call that they plan to pay back all debt with cash flow, and ramp up to 500K Model 3 per year with minimal spending (i.e no more cap raise). If this happens – while the competitors start facing troubles switching to electric, with plummeting profit margins, their market cap will reach a point where they can buy out a competitor. I bet they'd start by acquiring Panasonic cell manufacturing activities though, to further accelerate their tech lead. Remember that they own 60+% of global car battery production today, and their share continues to rise as they ramp up Model 3 (only 1/3 of the 1rst Gigafactory capacity is built yet, and the Shanghai plant is already under construction). Now, wait for the production of Model Y, the Semi and their upcoming Megapowerpack… Tesla's market cap has surpassed BMW and Daimler in the past two weeks. Someday, Wall Street will recognize that Tesla is the first (and only?) company to have crossed the chasm to all-electric, and maybe even realize that Tesla owns a big part of the renewable energy business thanks to multiyear technological advance and multi-industry economies of scale.
- rtkwe 8y ago
  > Funny, the strike price ($359.87) is already below the current stock price (360.47) Not any more (as of 1:15pm EST) the stock price is $357.30. either way the exact minute to minute price now doesn't particularly matter because we're outside the window.
- sulam 8y ago
  Where is this cash coming from?
  - deleted 8y ago

44 points by chollida1 8y ago

mnw21cam 8y ago

Web site blocked.

traderjane 8y ago
I use Firefox with ad-blockers and it worked just fine for me.
- danso 8y ago
  The LATimes (formerly of Tribune) and other Tribune-media properties block EU traffic because of GDPR: https://digiday.com/media/u-s-sites-continue-block-european-visitors-post-gdpr/ https://digiday.com/media/u-s-sites-continue-block-european-...
  - rcMgD2BwE72F 8y ago
    Because of GDPR, or because they do not respect people's basic rights to privacy?
    - garmaine 8y ago
      Don’t do that.
      - rcMgD2BwE72F 8y ago
        In fact, I can't say anything on this because they don't even let me read their privacy policy. They've simply blocked all European visitors since last May (!). FYI, here's how NPR.org comply with GDPR: https://imgur.com/a/32xAbpI https://imgur.com/a/32xAbpI. It's great. Since last May.
        danso 8y ago
        NPR has had its text-only domain (text.npr.org) since 2005: https://www.poynter.org/news/text-only-news-sites-are-slowly-making-comeback-heres-why https://www.poynter.org/news/text-only-news-sites-are-slowly... I agree it's a good practice, and one not unrelated to how NPR is one of the few news orgs with a good API [0]. Tribune Media, meanwhile, has had a different saga since 2005 to put it lightly, and it includes the industry's most epic failed mergers and reorgs [1]. I'm not privy to their internal development process, but I'm willing to bet that their lack of a GDPR site is much more about being unable to do so due to corporate/financial chaos, and less so because of a purported hatred toward "people's basic rights to privacy". [0] https://www.npr.org/api/index https://www.npr.org/api/index [1] https://www.chicagotribune.com/ct-history-of-tribune-ownership-saga-20160204-htmlstory.html https://www.chicagotribune.com/ct-history-of-tribune-ownersh...
        cronix 8y ago
        Countries/Unions are free to make new regulatory laws. It doesn't mean everyone will, or necessarily should, play along. I don't have a problem with companies changing where they decide to do business based on new laws that pop up. Maybe the EU just isn't a large enough part of LA Times revenue to justify the cost of implementing GDPR. Regardless of the reason, it's their choice, just like it's the EU's choice to pass the regulations. What's the issue?
        true_religion 8y ago
        NPR is a national news source. Thr LA times is just a local paper, one of about a half dozen the Tribune owns. I do not think they ever aspired to have a global prescence, much less actively serve the EU market. Whats wrong with a local press deciding to stay local, and only comply with local laws?
    - Cantonese 8y ago
      Maybe because they think cookie warnings are ridiculous.
frgtpsswrdlame 8y ago
http://outline.com/http://www.latimes.com/business/autos/la-fi-hy-tesla-convertible-bonds-20181115-story.html http://outline.com/http://www.latimes.com/business/autos/la-...
elektor 8y ago
https://outline.com/SzKTuJ https://outline.com/SzKTuJ Here you go.

lgrebe 8y ago

Blocked in EU

softbuilder 8y ago

Tl;dr - that debt is in convertible bonds and if the stock goes up a few bucks most holders will presumably opt to convert to owning Tesla stock. Doesn't that just dilute the stock?

tedsanders 8y ago
Yes.
- rcMgD2BwE72F 8y ago
  Which is why Musk said repeatedly that they will reimburse the debt with cash flow.
  - cagenut 8y ago
    musk says a lot of things. it will be interesting to see how it plays out with a former-cfo chairperson.
    - rcMgD2BwE72F 8y ago
      It's best to review Musk's goals over the longest term possible, because who cares about being late for a few of the objectives if they are widely exceeded soon after the deadline? I invite you to re-read the early presentations for the Model S and Gigafactory. Question: of the goals that have been achieved and those who haven't, which are the most important? And for the less important, are these delays interfering with Tesla's mission or just a temporary postponement to further focus on things that matter (e.g displacing oil and disrupting fossil fuel investment plans)?
rtkwe 8y ago
Only if they have to issue new stock to cover the conversion. I imagine the company has these shares in reserve.
- bryanlarsen 8y ago

rcMgD2BwE72F 8y ago

>If conditions are met, and all bondholders convert, Tesla would suddenly gain $920 million worth of much-needed financial flexibility. To spark a conversion, Tesla needs to boost its stock price to $359.87 or higher at some point in the three-month period between Dec. 1 and Feb. 28. The higher the price goes, the more likely holders will convert. Funny, the strike price ($359.87) is already below the current stock price (360.47) >(Under the bond agreement, Tesla can choose to pay the bonds off in cash, rather than exchange debt for stock. But given its cash needs, that’s highly unlikely.) Elon already said he intends to paid back the debt with cash rather than convert. They confirmed on the last earning call that they plan to pay back all debt with cash flow, and ramp up to 500K Model 3 per year with minimal spending (i.e no more cap raise). If this happens – while the competitors start facing troubles switching to electric, with plummeting profit margins, their market cap will reach a point where they can buy out a competitor. I bet they'd start by acquiring Panasonic cell manufacturing activities though, to further accelerate their tech lead. Remember that they own 60+% of global car battery production today, and their share continues to rise as they ramp up Model 3 (only 1/3 of the 1rst Gigafactory capacity is built yet, and the Shanghai plant is already under construction). Now, wait for the production of Model Y, the Semi and their upcoming Megapowerpack… Tesla's market cap has surpassed BMW and Daimler in the past two weeks. Someday, Wall Street will recognize that Tesla is the first (and only?) company to have crossed the chasm to all-electric, and maybe even realize that Tesla owns a big part of the renewable energy business thanks to multiyear technological advance and multi-industry economies of scale.

rtkwe 8y ago
> Funny, the strike price ($359.87) is already below the current stock price (360.47) Not any more (as of 1:15pm EST) the stock price is $357.30. either way the exact minute to minute price now doesn't particularly matter because we're outside the window.
sulam 8y ago
Where is this cash coming from?
- deleted 8y ago