Ever since Tesla Motors [NASDAQ:TSLA] announced its intent in late July to acquire fellow California company SolarCity [NASDAQ:SCTY] in a deal worth an estimated $2.6 billion, we — and the rest of the automotive media — have been paying close attention to the rise and fall in share price of both companies.
We’ve watched as investors have expressed concern over the deal, read the Federal Trade Commission’s official approval of the deal, and seen more and more litigation enter the court system as both private investors and pension funds alike seek to prevent the deal from going ahead. And we’ve heard some pretty shocking revelations about the deal itself: allegations that Tesla’s Board of Directors didn’t initially want to even consider buying SolarCity; the news that SolarCity was so desperate for money during the deal talks that it had liquidity issues so bad that Tesla (and other interested parties) lowered their bids to reflect the company’s poor cash flow; and the admittal that bankers at SolarCity’s chosen bank Lazard made a “computational error” in financial documents provided to SolarCity’s board of Directors that overestimated the company’s $3.4 billion debt by nearly 12 percent.
Despite this all however, Tesla and SolarCity submitted documents to the FTC this morning announcing a pair of special meetings will be held on November 17 to allow shareholders of both companies to vote on the proposed merger. The announcement, made at the start of the day was accompanied by a short press release sent to the media by Tesla in which it stated that it will provide updates to shareholders about the strategic plans for the merger, as well as more financial information, on November 1.
The press release also confirmed the mystery product due to be unveiled by Tesla and SolarCity in a joint press event on October 28: a brand-new Solar Roof designed to integrate directly with Tesla’s next-generation Powerwall, “Powerwall 2.0.” No mention was given as to what we can expect on the October 17 press event, although we’re now expecting a vehicular product rather than an energy storage product (holding a seperate reveal event for Tesla Powerwall 2.0 would be overkill if the Solar Roof reveal is planned just over a week later).
While the merger itself is still considered controversial by some — SolarCity is headed by Tesla CEO Elon Musk’s cousins Lyndon and Peter Rive — Elon Musk maintains to call the deal a “no-brainer,” saying that the seven court cases pending against Tesla in reference to the deal alleging that Musk would stand to benefit personally from the deal have “no merit.”
Tesla’s regulatory filing made this morning also detailed Tesla’s plan to pay out an additional $441 million to holders of its 2018 senior convertible notes. The funds, due to be paid out during both the rest of Q3 and Q4, will leave Tesla with an additional $205 million remaining in convertible notes to pay out, likely sometime next year.
While it was not mentioned in Tesla’s regulatory filing this morning, Elon Musk mentioned on Sunday on Twitter that Tesla would not need to raise either equity or corporate debt in the final quarter of 2016 in order to complete its acquisition of SolarCity. When questioned by a follower if the company would need to rely on either in the first quarter of 2017, Musk responded with “Probably not then either.”
Interestingly, while Tesla’s stock has gone through some reasonably large fluctuations in the past few days, the news from Tesla this morning has actually caused Tesla to climb in value slightly on yesterday’s closing value, finishing the day $1.51 higher than it opened.
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