Three days into the Tesla “going private” saga, everyone continues to scramble for more information on the biggest wildcard in the entire equation: the “committed funding” as represented by Elon Musk: shareholders are asking where it is; bankers – i.e., those who should have arranged it – are asking where it is; even the SEC is asking where it is (and probing if Musk was being “truthful” with the alternative being stock manipulation which opens up Tesla to fraud lawsuits), and now Reuters reports that even the Tesla Board of Directors wants to know where it is.
According to Reuters, Tesla’s board of directors is seeking more information from CEO Elon Musk about the finance for his plan to take the U.S. electric car maker private.
And here is the punchline: While Tesla’s board has held multiple discussions about the proposal – as it documented in its statement on Wednesday – it has “not yet received a detailed financing plan from Musk and specific information on who will provide the funding.”
As a reminder, in a statement on Wednesday, Tesla’s board said its discussion with Musk “addressed the funding” for the deal, without offering more details. And now we know why: because it had none, and one increasingly wonders if the Board simply made up the fact that it had multiple discussions just to cover Musk’s back.
But there is another big problem, if only from a timing/legal standpoint: if the board has no idea where the funding is coming from, there is no way it could have signed off on it, thereby “securing it”, which means that all else equal, Musk’s tweet that sent the stock price soaring was a fabrication.
As Reuters adds, the exact information that Musk communicated to the board about his plan could not be learned.
Meanwhile, as CNBC reported earlier and as Reuters confirms, the board expects to make a decision on whether to launch a formal review of Musk’s proposal in the coming days, and is speaking to investment bankers about hiring financial advisers to assist it in its review in such scenario.
And, as we noted earlier, if the board launches a formal review of Musk’s bid, he would have to recuse himself, or a special board committee would have to be formed.
Of course, that presumes that the SEC doesn’t determine first that Musk never had any “committed funding” in the first place and what ensued on Tuesday was one of the greatest acts of stock manipulation in recent history. In that case, his recusal from the board would be permanent.