Whitegate Partners – Strong Demand For Tesla Bonds.

Whitegate Partners – Strong Demand For Tesla Bonds.

The Silicon Valley-based manufacturer Tesla said they would be undertaking several stock and bond moves to raise an estimated $ 830 million. The increase in the bond offering suggests that this funding target has now been raised to almost $ 945 million.

Tesla initially looked to raise $ 450 million from five year senior convertible bonds, but they have increased that by 17 percent and are now looking to raise $ 525 million. According to a source within Tesla that spoke to correspondents for Whitegate Partners, the Palo Alto, California based automaker intends to use the bulk of the funds raised to pay back a Department of Energy loan.

The company, which previously made the Tesla Roadster electric sports car and now produces the all-electric sedan Model S, was also able to secure more favorable terms than originally sought for the bond offer thanks to increased investor demand. Whitegate Partners source apparently revealed that the coupon on the convertible bonds, originally expected to be between 2 and 2.5 percent, has been revised down to between 1.5 and 2 percent. A 35 percent conversion premium has also been set.

Tesla was extended a $ 465 million loan from the U.S. Department of Energy in January 2009 to cover the development and setup manufacturing costs for the Model S, which retails for $ 70,000, although federal tax credits are available.

According to Shanna Hendriks, a Tesla spokeswoman who spoke to Whitegate Partners representatives on a conference call, approximately $ 440 million of that Department of Energy loan remains outstanding, including interest charges.

The company, which previously made the Tesla Roadster electric sports car and now produces the all-electric sedan Model S, was also able to secure more favorable terms than originally sought for the bond offer thanks to increased investor demand. Whitegate Partners source apparently revealed that the coupon on the convertible bonds, originally expected to be between 2 and 2.5 percent, has been revised down to between 1.5 and 2 percent. A 35 percent conversion premium has also been set.

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