Tesla Motors Inc., the maker of electric cars run by Elon Musk, plans to sell as much as $830 million in shares and debt to repay its federal loan faster than planned as its stock trades near record highs.
The company said Wednesday in a U.S. regulatory filing and a statement that proceeds from sale the 2.7 million shares, worth $229 million at the day's $84.84 closing price, and $450 million in convertible senior notes due in 2018 will go to pay back a $465 million federal loan with interest and to fund other operations. The Energy Department agreed to the modified terms Tuesday, according to the filing.
"They are obviously striking when the iron is hot, and are probably going to find willing buyers," said Alan Baum, analyst at Baum & Associates in West Bloomfield, Michigan. Paying off the U.S. loan early "is going to give Tesla more flexibility with the use of their funds going forward," he said.
With an early repayment, Tesla would be the first recipient of an Advanced Technology Vehicles Manufacturing loan to make the government whole. The standard repayment schedule for Ford Motor Co.'s $5.9 billion loan and Nissan Motor Co.'s $1.4 billion loan is 10 years. Fisker Automotive Inc., which missed a payment last month, is at risk of bankruptcy after halting vehicle output last year and firing most staff last month.
Tesla shares rose 7.9 percent to $91.50 at 7: 20 p.m. in New York after the close of regular trading. The shares have surged 188 percent this year through Wednesday's close, compared with a 17 percent increase for the Russell 1000 Index.
Aoife McCarthy, an Energy Department spokeswoman, declined to comment.
The federal loan program has been criticized by Republicans in Congress, and Tesla and Fisker were lumped together as "losers" by Mitt Romney, the 2012 GOP nominee, as he campaigned for president last year. Sarah Palin, the Republican 2008 vice presidential candidate, in a Facebook comment last month attacked Tesla as "Obama-subsidized" and the loan program as an "atrocious waste of taxpayer money."
Tesla's move comes after the Palo Alto, California-based company last week reported its first quarterly profit, leading its shares to surge to record highs. The company in March announced an arrangement to repay its U.S. loan in five years, rather than the original 10-year period.
Tesla didn't clarify how much faster it would pay back the funds. The company said last week it made a payment of about $13 million in the first quarter.
Chief Executive Officer Musk, 41, already Tesla's biggest shareholder, intends to buy $100 million of shares of common stock at the same public offering price, the company said. He will invest about $45 million in the public sale and about $55 million in a private placement.
"He is making a statement that, with the stock doing well, he’s personally willing to buy at what would have been considered an inflated price, shares which he expects can go higher still," Baum said.
Recent gains for Tesla shares, along with SolarCity Corp., a solar power company also led by Musk, have raised his fortune to $5.1 billion, according to the Bloomberg Billionaires Index.
Tesla's market capitalization totaled $9.8 billion as of Wednesday’s close, higher than the $8.6 billion for Turin, Italy-based Fiat SpA, majority owner of Chrysler Group LLC.
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