US regulators are examining how Tesla Inc Chief Executive Elon Musk announced his plan to take the electric carmaker private and whether his statement was truthful, the Wall Street Journal reported on Wednesday. The company declined to comment on whether its CEO's financing comments were true, while the U.S. According to the reports, Elon Musk said that according to public firms and companies, share prices vary depending on the demand in the market and the exchange rates.
In an internal letter to Tesla employees, Musk confirmed he was considering taking the company private in order to free it from "short-term thinking" and other "distractions".
The strong rebuke from the board hinted strongly that the idea of taking Tesla private at $420 a share would be engineered by Musk - and not by the board.
Musk has also said he would be looking to keep his ownership of Tesla at around 20 percent, and that a special goal vehicle, like the one that exists at his aerospace company SpaceX, would allow Tesla shareholders to remain invested if they so choose.
Shares were down 6 percent to $347.26 in midday trading Thursday.
Some Wall Street analysts were skeptical of Musk's ability to gather the huge financial backing to complete such a deal, given that Tesla loses money, has $10.9 billion of debt and its bonds are rated junk by credit ratings agencies.
Such is the unusual nature of Elon Musk's varied business ventures, there tends to be considerable attention on pretty much everything he does and says.
The agreement would be the largest purchase based on debt of all time, surpassing the record of USA $ 45 billion established by the firm of Texas Energy Future Holdings.
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Tesla disclosed in its most recent quarterly report that it has "received requests for information from regulators and governmental authorities", including the SEC.
Short sellers, who bet that shares will fall and have been a longtime irritant to Musk, increased their positions slightly on Thursday. The talks failed to progress due to disagreements over ownership and have not started up again.
China's Tencent Holdings Ltd, which took a 5 percent stake in Tesla past year, could also be a possible partner.
Tesla's board of directors is analyzing Musk's offer to take Tesla private at US$ 420 per share. Once Tesla is private, Jurasic said, "I don't see any way you could get back in as your typical retail investor".
Some on Wall Street shared that view. Musk had discussed about funding a buyout to the PIF. But federal securities laws do allow smaller investors to retain stakes in public companies that decide to go private, said Erik Weingold, an attorney who specializes in private placements.
News of the potential buyout already has stung investors known as "short sellers" who have always been a thorn in Musk's side. Tesla's stock backtracked by more than 2 percent to close at $370.34.
Members of the board who signed the statement were Brad Buss, Robyn Denholm, Ira Ehrenpreis, Antonio Gracias, Linda Johnson Rice and James Murdoch. "I, like a great many others, am confused by what is motivating" the go-private plan and "why it was communicated in the way it was".