Seeking Alpha

FT: Tesla bond sale brings in $2B

  • Tesla (TSLA) has raised $2B in the largest U.S. convertible-bond offering in over two years, the FT reports.
  • The electric-car company had originally sought to sell only $1.6B worth of debt, but increased the amount due to strong demand. An over-allotment provision could take the deal to $2.3B.
  • The sale comes amid a 70% surge in Tesla's share price since the start of the year.
  • Tesla sold $800M in five-year debt with a coupon payment of 25 basis points and $1.2B in seven-year notes at 125 basis points. Both bonds have an equity conversion premium of 42.5%.
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Comments (6)
  • Miro Kefurt
    , contributor
    Comments (692) | Send Message
     
    Reminds me of the Bond Sale GM did years ago, of course those highly promoted bonds by the very same issuer are worthless today.
    28 Feb 2014, 04:25 AM Reply Like
  • chopchop0
    , contributor
    Comments (3952) | Send Message
     
    Mediocre car company.... what do you expect?
    28 Feb 2014, 09:56 AM Reply Like
  • Esekla
    , contributor
    Comments (3677) | Send Message
     
    The terms are quite favorable! Further commentary here:

     

    http://seekingalpha.co...
    28 Feb 2014, 04:55 AM Reply Like
  • James Duade
    , contributor
    Comments (305) | Send Message
     
    Serious question:

     

    The annual interest payments on these convertibles per year for Tesla will be $34.5 million (i.e., 125 basis points + 25 basis points * $2.3 Billion). Is this correct? Thanks to anyone who can provide further clarity.

     

    James
    28 Feb 2014, 07:17 AM Reply Like
  • Esekla
    , contributor
    Comments (3677) | Send Message
     
    Well the bond offering is "only" $2B so far, but even so, your math seems off. I calculate 800m x .0025 = 2m + 1200m x .0125 = 15m, for a grand total of 17m per year.

     

    See discussion in new article, here:

     

    http://seekingalpha.co...
    28 Feb 2014, 07:49 AM Reply Like
  • James Duade
    , contributor
    Comments (305) | Send Message
     
    Thanks Esekla, I see my silly math error. I appreciate the correction.
    28 Feb 2014, 08:04 AM Reply Like
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