Elon Musk told a federal court in San Francisco on Monday that he may sell SpaceX shares to take Tesla private in 2018. He was then and still is the CEO and largest shareholder of both the companies.
Elon Musk is being sued by Tesla shareholders for a series of tweets he wrote in August 2018, saying that “funding was secure” to take the automaker private for $420 per share, and that the deal was in full swing. “Investor support” was confirmed.
Trading in Tesla was halted following his tweet and its share price was volatile for weeks. Shareholders in the certified class action lawsuit allege that Musk’s tweets were reckless and false, and that relying on his statements to make investment decisions cost them a lot of money.
Elon Musk later claimed that he had a verbal commitment from Saudi Arabia’s sovereign wealth fund, and was sure that funding would come at his proposed price based on a handshake. However, the deal never materialised. During his second day on the witness stand, Elon Musk claimed another reason he wanted to “secure funding” for a deal in 2018 was so he could sell shares of SpaceX, a US defense contractor and satellite internet company. So that he can finance the transaction.
SpaceX stock alone means ‘the money is safe’, Elon Musk said under oath. Not that I want to sell SpaceX stock but I could, and if you look at the Twitter transactions that’s what I did. I sold Tesla stock to cover the Twitter transaction.
Elon Musk did not say how many shares he would be able to sell in his reusable rocket maker, to whom and at what cost, to finance the Tesla buyout. In April 2018, SpaceX said in a Securities and Exchange Commission filing that it had raised approximately $214 million as part of a financing round in which it was seeking more than $500 million in total equity funding.
An attorney for the shareholders, Nicholas L. Levy of Levy & Korsinski. Levi. Porritt asked Musk whether the price he suggested for Tesla shares was a joke since 420 is a reference to cannabis in pop culture. Elon Musk insisted it was a coincidence. That said, I do seem to have some karma around 420, I must question at this point whether it is good or bad karma.
This is not the first legal action Musk has faced over his tweets. The SEC charged Musk and Tesla with civil securities fraud shortly after their posting, and they separately paid a $20 million fine to the federal agency to settle the charges. He later signed an amended consent decree that required Elon Musk to temporarily relinquish his role as chairman of the board at Tesla.
Elon Musk recently became the CEO of social media business Twitter after leading a $44 billion leveraged buyout of the company in October 2022. Saudi Prince Alwaleed bin Talal bin Abdulaziz is the second largest shareholder of the social media company after Musk. Last November, Sen. Chris Murphy, D-Conn., sent a letter to the Committee on Foreign Investment in the United States requesting a review of the financing of the Musk-Twitter deal.
Original Content @Biz Craft