Tesla Motors Inc (NASDAQ:TSLA) has disclosed in an SEC filing that it raised its debt and equity offerings by 30 percent so that it can pay back the clean energy loan it received from the U.S. Department of Energy. That pushes its debt up to $1.08 billion and helps build some cash for the automaker.
Bloomberg’s Alan Ohnsman and Chris Reiter report that Tesla Motors Inc (NASDAQ:TSLA) wants to sell 3.9 million shares at a rate of $92.24 each. Of those shares, CEO Elon Musk himself will buy 1.08 million shares, which equates to the $100 million he announced he would on Thursday. Convertible notes will add about $648 million on to that total.
Tesla Motors To Pay Uncle Sam Back Early
According to the SEC filing, Tesla said it will use $452.4 million of the cash to pay back the DOE loan it received under the Advanced Technology Vehicles Manufacturing program. This clearly puts the automaker in its own class, especially when compared to other companies like Fisker Automotive, which tried a similar plan to pay back its loan but failed. Now it’s battling bankruptcy after laying off three-quarters of its staff in April.
Ohnsman and Reiter also point out that Tesla Motors Inc (NASDAQ:TSLA) is even setting itself apart from major automakers like Ford Motor Company (NYSE:F), which took out a $5.9 billion loan and expects to pay it back over 10 years.
The Implications Of Tesla’s Debt Increase
According to Tesla’s SEC filing, after adjusting for the loan repayment, fundraising and hedging-related costs, its cash and cash equivalents would jump to $678.8 million—more than triple the company’s previous cash level of $214.4 million. But that comes at a cost, as everything does.
Goldman Sachs analysts Patrick Archambault and Aditya Oberoi released a report this week focusing on Tesla Motors Inc (NASDAQ:TSLA)’s decision to raise all that debt. They believe the transaction will be dilutive to the company’s earnings per share by 5 cent this and then 6 percent next year and 4 percent the following year.
That would put their earnings per share estimates to a loss of 2 cents per share this year, earnings of $1.22 per share next year and earnings of $1.65 per share the following year. Unlike other analysts, they did not change their price target for shares of Tesla Motors Inc (NASDAQ:TSLA). They left their six-month target at $61 per share.