Elon Musk says Saudis back Tesla buyout

A Tesla charges outside a mall in Beijing China

In a blog post on Monday the chief executive of Tesla said that the Saudi Arabian sovereign wealth fund offered to fund taking the all-electric automaker private during a meeting on July 31.

Former SEC attorney Teresa Goody and The Wall Street Journal tech and autos reporter Tim Higgins on the fallout from Tesla CEO Elon Musk's tweet about potentially taking the company private.

The Saudi investment fund approached Musk months ago to discuss acquiring a minority stake but was turned down as the company did not plan on issuing new shares at the time, a source close to the discussions told Bloomberg.

Despite tweeting on Tuesday that funding had been secured, Musk's newest blog post appears to contradict that claim.

"It wouldn't be right to share information about going private with just our largest investors without sharing the same information with all investors at the same time", Musk wrote.

Bloomberg reported on Sunday that PIF is in talks that could see it become a significant investor in Tesla as part of the take-private plan but has made no firm decision, citing people with knowledge of the fund's plans.

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"They first met with me at the beginning of 2017 to express this interest because of the important need to diversify away from oil", Musk wrote.

Moody's Investor Services on Friday had said Musk's consideration to take Tesla private was credit negative, noting the company's negative cash flow in the second quarter and maturities of $1.2 billion in convertible debt through March 2019. It is appropriate to complete those discussions before presenting a detailed proposal to an independent board committee.

"Therefore, reports that more than $70B would be needed to take Tesla private dramatically overstate the actual capital raise needed", Musk added.

As a result, Tesla shares jumped 11 per cent, causing so-called short-sellers who have been betting on the stock crashing for years to lose millions. Since the series of Tweets and a letter to employees in which Musk laid out his thought process, there has been silence on the topic from both Musk and the company. I will now continue to talk with investors, and I have engaged advisors to investigate a range of potential structures and options.

The U.S. Securities and Exchange Commission, which has been gathering information about Tesla's public pronouncements on manufacturing goals and sales targets, is intensifying its scrutiny of the company's public statements in the wake of Musk's tweet, people familiar with the matter have said. "The only reason why this is not certain is that it's contingent on a shareholder vote".

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