Tesla Motors (TSLA) plans to repay $465M in Energy Department loans five years early in 2017,...

Tesla Motors (TSLA) plans to repay $465M in Energy Department loans five years early in 2017, the company said yesterday in its annual report. Under new terms of the debt, warrants that Tesla issued to the government will vest in 2018 if the loans are not paid off, enabling Energy to purchase over 3M company shares at a discount.
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Comments (9)
  • John Petersen
    , contributor
    Comments (30569) | Send Message
    The DOE warrants will be exercisable at $8.94 per share and currently have a theoretical spread value of $29.29 each, or ~$90 million in the aggregate.


    That works out to 2.06% of Tesla's current $4.35 billion market capitalization.


    I may be a cynic, but it sounds like the DOE mice are saying "get us out of this trap five years early and you can keep the cheese."
    8 Mar 2013, 06:52 AM Reply Like
  • JRP3
    , contributor
    Comments (9594) | Send Message
    Where was that going concern clause in the 10K you kept talking about?
    8 Mar 2013, 08:13 AM Reply Like
  • John Petersen
    , contributor
    Comments (30569) | Send Message
    I specifically said, "I am not predicting that Tesla will be saddled with a going concern paragraph in its annual report. Nevertheless, I see a substantial risk of a qualified audit opinion."




    Frankly I'm amazed that Tesla was able to convince PWC that a clean opinion was appropriate in light of the DOE's renegotiation of the loan terms, but I do understand the number and variety of factors that go into that kind of decision.
    8 Mar 2013, 09:18 AM Reply Like
  • Randy Carlson
    , contributor
    Comments (2702) | Send Message
    Oh John, The warrant kicker was structured into the original loan agreement precisely to encourage Tesla to pay it off early if they made it big, which they have (stock price more than double the IPO) and which they are (payoff in 25 installments rather than 40).


    And BTW, have you ever chanced to notice that over time when you write about Tesla's market cap, you keep having to use bigger and bigger numbers? I don't suppose that actually means anything with respect to Tesla's progress, any more than their making all those cars that go really fast, look really good and have folks lined up to buy them. Or their selling $40 million in EV credits to other manufacturers who just don't seem to be making it in the EV market like Tesla has.


    I haven't dug into the latest financial statement nearly so far as I am sure you have. Were those $40 million in credits for just the ~2,500 cars built between June and December? If so, that's a rather respectably (from a TSLA shareholder perspective) $16,000 a car.
    8 Mar 2013, 01:19 PM Reply Like
    , contributor
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    I think "cynic" might be a little generous. Imagine the negativity you would have expressed if Tesla had tried to extend the loan period - but they actually did the opposite, and yet you're still trying to find a negative angle.


    Now if I didn't know better, I might think that you lack a certain objectivity when it comes to TSLA, that there may be just a hint of a bias in your writings. Or am I just a cynic, too?
    16 Mar 2013, 06:36 AM Reply Like
  • 123man
    , contributor
    Comments (1432) | Send Message
    Almost every set of numbers can be used to reach to totally different conclusions - this is no exception -
    8 Mar 2013, 09:09 AM Reply Like
  • Cassina Tarsia
    , contributor
    Comments (662) | Send Message
    Don't you think that it could have something to do with less interest to pay overall for Tesla?
    8 Mar 2013, 10:08 AM Reply Like
  • hcsharp
    , contributor
    Comments (22) | Send Message
    @teslaflight, No it has nothing to do with that. The DOE loans were below market interest rates so that is actually a reason to prolong paying it off. Further, Tesla is seriously capital constrained right now. They are growing exceptionally fast and need all the capital they can get and then some. The DOE asked Tesla to consider paying the loans off early because Tesla has been so successful.
    16 Mar 2013, 01:53 PM Reply Like
  • seeker34567
    , contributor
    Comments (205) | Send Message
    Tesla was suppose to pay the govt. loan in 10 years and they are paying it in 5. They have revenue this year of $1.1B plus next year they have a second car out (Roadster) which may double their yearly revenue.


    Why would there be an issue in the payment of loan? And why even mention a company buying stocks at discount when they will be making billions? There are no issues with the Telsa S on the road now? Is there another plan to swindle the stockholders?
    11 Mar 2013, 05:15 AM Reply Like
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