Shareholders in Tesla Motors Inc. and SolarCity Corp. will be given the chance to vote on a proposed merger between the companies at two special meetings.
The news was announced in a regulatory filing from the two companies on Wednesday. An agreement is in place for a merger between SolarCity and Tesla, which was agreed on July 31, according to a report from David Welch of Bloomberg.
Shareholders voice disquiet at involvement of Musk
Entrepreneur Elon Musk is chairman and largest shareholder of both Tesla and SolarCity. He is also chief executive officer of electric car manufacturer Tesla, while the current CEO of SolarCity is Lyndon Rive, a cousin of Musk.
There has been some unrest among investors due to Musk’s involvement with both companies. There have also been lawsuits from seven different stockholders.
Some shareholders have also questioned the business logic of Musk’s close ties. Both Tesla and solar panel installer SolarCity are burning cash while working to fund future growth in developing industries.
At the same timem Tesla made a regulatory filing this Tuesday in which it revealed that it would not need to raise capital in Q4. It may not need to raise capital in Q1 if the merger gets the green light.
Tesla to announce strategic plans
A statement from Tesla released this Wednesday, said that more information on a strategic plan to combine the companies will be shared with shareholders on 1 November. Further financial information will also be provided.
“Over the next few weeks, Tesla will share important updates regarding our strategic plan for the combined company” read the statement. Among those plans is the announcement of a solar roof project on October 28.
Musk has previously outlined his vision for an enlarged Tesla company which incorporates SolarCity’s solar panel business. He says that the new company would become a one-stop shop for solar energy generation, home battery storage solutions and electric car charging.
Shareholders to vote November 17
Tesla is currently funding development of the Model 3 electric car and its Gigafactory lithium battery facility. The Model 3 is the vehicle expected to bring electric cars to the mass market.
In this Wednesday’s filing, the companies said that Tesla is paying $441 million to those who hold its 2018 senior convertible notes. It has another $205 million outstanding. The $441 million is expected to be paid in Q3 and Q4, according to the filing.
The statement revealed that Tesla shareholders will be able to vote on the potential merger online, by phone, or by email at any point on or before November 16.
Shareholders have been vocal in their criticism of the proposed merger. Some of those that have filed lawsuits are pressing for an injunction to stop the deal from going through.
Tesla staying busy in the next few weeks
However, Musk appears determined to push ahead with the merger despite the opposition.
“If the Merger is completed, SolarCity stockholders will have the right to receive 0.110 shares of Tesla Common Stock for each share of SolarCity Common Stock issued,” said an S4 filed by Tesla with the SEC on Monday.
Before the vote takes place on November 1 there are a number of events that need to happen. Tesla has a court date on October 14 in which the company will ask a judge to consolidate the seven separate lawsuits. The company will then announce an “unexpected” product on October 17.
While there are still a number of ways that the merger could be halted, it appears that Musk is determined to make it happen.