The Strategist

Bankers are eyeing a deal with Tesla

08/22/2018 - 17:09

Elon Musk stirred up the whole world of investment banking services with his message on Twitter about the possible transfer of Tesla to the category of private companies.

The fact is that no company of Tesla scale has yet been bought by private investors. Moreover, the standard way to do this, that is, burdening the company with debts of borrowed funds, is not an option for the automaker, since it already serves a debt of about $ 11 billion and does not earn anything. The company reported operating losses of $ 1.6 billion in 2017.

The discussion about how realistic this deal was divided bankers. As Reuters reports referring to its own sources, the discussion of whether a deal is one of the main opportunities or will leave the participants in fools has grown into a real debate during a conference call at an investment bank.

"Given the size of the deal, the debt burden and the cash flow of the company, bankers seem to be inclined to think that this deal will happen in the near future," said Stefan Selig, a former Bank of America banker, founder of BridgePark Advisors LLC, which provides advisory services on financial and strategic issues, but Tesla does not plan to participate in the purchase.

According to the agency, representatives of banks interested in the deal communicate directly with the special committee of the Tesla Council, which independently assesses the prospects for proposals.

Cooperation with Musk threatens with other risks apart from reputation, the agency notes, considering that the US Securities and Exchange Commission investigates the reasonableness of the businessman's message on Twitter that the financing of the deal is secured.

However, many bankers told the agency that this would not be a deterrent given the scope of the potential transaction.


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