SolarCity, Tesla and SpaceX three total $ 50 billion worth of the company, they have a common soul – Thomas g. How to ensure the development of the three companies? Tesla burnt 1.5 billion dollars last year, SpaceX and SolarCity is devouring cash monsters. Thomas g solution to financial difficulties is a little unusual: mortgage equity, loans to banks and loans to buy back shares, buying corporate bonds, used company money to support other enterprise development. This means giving some cause for concern.
Recently, the Wall Street Journal published an article on financial operation carried out a detailed analysis of the musk, which reads as follows:
Starting from October 2014, SolarCity trying to attract retail investors to invest in its solar business, through the company’s Web site to issue so-called “solar bonds (solar bonds)”, total has earned 214 million dollars. For now, buying bonds is the largest rocket manufacturer space exploration technologies Corporation (Space Exploration Technologies Inc.), bonds issued $ 105 million last month, SolarCity, space exploration technologies Corporation accounted for $ 90 million. Dolce Gabbana iPhone plus Case
Billionaire entrepreneur Mr MASKEY said in an interview, buying bonds is a “good investment.” He thinks they understand them better than anyone else. Mr MASKEY is SolarCity’s largest shareholder, is both Chairman of SolarCity and SpaceX CEO.
Mr MASKEY, 44 years old, he was not afraid to risk, go ahead and establish a unique business empire. He also lead SolarCity and SpaceX and Tesla, the three companies, which total $ 50 billion worth of the company. Thomas g industry because of his change, he said, once the SpaceX successfully launched a rocket to Mars several times in succession, he retired later in life on Mars, musk is no joke, he was serious.
Mortgage equity loan companies
All along, the musk are financial support for his own company, help them to develop their business, the technique he used is a bit unconventional.
Regulatory data shows that in addition to buying bonds, Mr MASKEY also use the line of credit to obtain $ 475 million funding, when SolarCity and Tesla needed financial backing, musk will pay for stock. The line of credit is secured, according to Wednesday’s closing price, Thomas g collateral of SolarCity and Tesla shares worth 2.51 billion dollars.
Few executives in order to obtain a personal loan mortgage shares, because that would pose a threat to other shareholders, can also lead to clashes between executives ‘ interests and interests of the company. If the share price falls, the borrower may send a margin call notification, forcing executives to sell shares or increase collateral for repayment of the loan.
Tesla has revealed in a regulatory filing, received notification of margin–loan – it is entirely possible and musk, Tesla says: “notice may result in the company’s share price to fall further. ”
Last year, Canada specialty Pharma Valeant’s stock price had decreased by 14% in one day, as the company CEO maikeer·piersen (Michael Pearson) received a margin call notification, Pearson by his company holding equity loan of 100 million US dollars. In accordance with the notification requirements, the lender sold 1.3 million shares.
Financial manipulation controversy
Some corporate governance experts and analysts said musk with SolarCity and Tesla’s stock as collateral to borrow large amounts of money, which itself has a problem, and now the two companies are already large, publicly traded companies, this issue more.
Unit Economics LLC, founder and senior analyst neisen·weisi (Nathan Weiss): “as an analyst, if the company or the management entities of direct loans, and with these entities and there is a personal or financial interest, I usually give them bright red. ”
Mr MASKEY said he has a lot of personal loans and financial operations between SolarCity and SpaceX and Tesla, is questioned about this behavior is “reasonable”. In an interview, he also said: “a couple of times a company’s performance much better than the other company I will borrow some money. “Musk to defend his conduct, he believes this is consistent with his philosophy:” If investors, morally I should put my money. I’m not supposed to tell someone to do something they are not willing to do. ”
”Tesla, SolarCity and SpaceX is like a pyramid, if one part of the problem, we don’t want to trigger similar consequences like House of cards collapses, this is the most important. ”
Musk emphasized personal loans would not threaten shareholder because his personal assets worth more than 10 billion dollars, while loan assets under 5%. These assets do not include SpaceX shares, SpaceX, after all, is not listed. Mr MASKEY also said that if necessary, he would mortgage more of SpaceX and Tesla stock.
In the interview, Mr MASKEY told the media: “If you do receive a margin call notification, unable to pay the rate almost to zero. ”
Musk’s stock is worth?
Recently, Mr MASKEY’s career was in the ascendant, and Bordeaux. Tesla has just released Model 3 electric vehicles, 7 days before 325,000 people book, every book needs to pay a $ 1000 deposit. Since 1925, in addition to the Tesla is not a United States automobile startups succeed.
On April 8 this year, SpaceX rocket landed in the Atlantic Ocean on a floating platform, this platform is controlled by GPS, landed for the first time in company history. Dolce & Gabbana iPhone 6 Plus Case
Tesla’s latest proxy statement shows that Thomas g owns 37 million shares of Tesla stock, share 27%, according to Wednesday’s closing price of US $ 9.36 billion. Regulatory data shows otherwise, Thomas g control of the 22% stake in SolarCity, a total of 21.8 million shares, according to Wednesday’s closing price of us $ 726 million.
Earlier this year, SpaceX won the new round of financing, at the company’s US $ 12 billion. Mr MASKEY SpaceX shares held and not released, Mr MASKEY also declined.
Mr MASKEY is Tesla’s Chairman and CEO, he did not get paid. Last year, the total pay only $ 37584 musk, in line with California’s minimum wage requirement, but he never received the money. SolarCity, musk’s total compensation of $ 1.2 million, mostly of stock options, granted in stages the next 3 years. SpaceX to his salary of $ 2.4 million, according to insiders, this compensation included $ 38000 sum of wages, rest is stock.
The attitude of investors: don’t worry
In February, the ISS QuickScore (owned by Institutional Shareholder Services Department) has published a report, it found in the United States only 13% of the 3,000 largest public company executives or directors of mortgage equity access loan.
SolarCity and Tesla’s stock is not stable, SolarCity has fallen 35% this year, from the end of December to February, Tesla lost 40%, has since rebounded. Mr MASKEY has indicated to the shareholders, he believed in the idea: the captain was the last to leave the boat. In the interview, Mr MASKEY said he has no intention of selling any of Tesla stock, even adding SpaceX shares as collateral.
VC firm Draper Fisher Jurvetson (Draper Fisher Jurvetson), founding partner of shidifen·youerweitesong (Stephen Jurvetson), musk’s move and not a cause for concern. Draper Fisher Jurvetson is SpaceX, SolarCity and Tesla’s early investors and a major investor. Youerweitesong think the musk’s “passion is amazing,” he also expressed appreciation for the dedication and foresight of musk. Youerweitesong is a Director of SpaceX and Tesla.
Musk’s personal loans in line with shareholders ‘ best interests? Directors discussed around this? Youerweitesong responded by saying: “we do not intend to discuss this issue. “He added:” you should see the musk’s stake. “As long as the musk’s stake is less than 5%, there is no need to worry, you only need to concern. Mr MASKEY said he himself had set a 5% line.
There have been funding crisis
In 2002, Thomas g selling PayPal shares received $ 165 million Fund, he used the money to support development of SolarCity and SpaceX and Tesla. Right from the beginning, he used a startup money to help another company development.
By the end of 2008, Tesla appears in the financial crisis, as companies are unable to raise funds on the one hand, there is the new Roadster electric cars because of manufacturing delays. Fortunately, Tesla received $ 40 million in financing at the critical moment, Thomas g pledged $ 20 million of the money was his own.
Around the same time, SpaceX also because the development of rocket businesses money in an emergency. SpaceX and later United States space agency NASA signed a 1.6 billion dollar contract, things began to improve, SpaceX pledge launch 12 unmanned cargo spacecraft to the international space station.
In early 2009, the musk from SpaceX borrowed $ 20 million in his own name, he explained that the loan will not be used to finance Tesla.
Tesla went public in June 2010, musk has sold 1.4 million shares of Tesla stock, received $ 23.8 million, he used the money to pay SpaceX loan interest. Musk stressed that this was the only time he shipped the Tesla stock.
The beginning of 2013, as Molde s sedan dystocia, Tesla capital close to the red line, when cars due to engine defects and other problems is not making good progress. At the same time, SolarCity for expansion of solar panel lease business needs financial support.
Loans to buy shares
In order to resolve the funding dilemma, Thomas g increases the credit limit, for $ 85 million, before, later increased to $ 300 million. Thomas g to provide loans that Goldman Sachs and Morgan Stanley, which declined to comment.
Regulatory filings also showed that musk 9.5 million shares of Tesla stock as collateral, to increase credit lines, total musk in this part of the stock-holding 29%; used as collateral are not more than 6 million shares of SolarCity stock, which accounted for 29% of personal holdings.
May 2013 to October 2013, after getting loans with credit lines, Thomas g for taking part of the money to buy 100 million dollars worth of Tesla stock and $ 10 million SolarCity stock, the equivalent of injecting capital into the two companies. SolarCity spokesman said that musk’s investment ratio is not high, because the size of the deal to $ 398 million.
Analysts say Tesla burn cash reserves of more than US $ 1.5 billion last year. Some analysts worry that the Model x SUV will delay delivery. Due to higher costs, nearly half of SolarCity cut its growth targets, companies rushed down. Investors also worried about SolarCity may not be able to continue to receive subsidies, but this ultimately did not happen. SolarCity spokesman responded that the reduction target because the company will focus on profit.
Last year, Tesla disclosed that musk would increase lines of credit to $ 475 million. Regulatory information, musk, bought $ 20 million of Tesla stock, $ 17.7 million SolarCity shares. In the interview, Mr MASKEY said buying stocks he and shareholders of the two companies are standing in a line, two facilities are not up to the credit limit of the 65%.
Buy SolarCity solar bonds
SpaceX has tried three times to buy SolarCity solar bonds issued by March 2015 invest 90 million dollars in June 2015, spent $ 75 million, last month spent $ 90 million to buy.
Analyst at Axiom capital management in New York gaodeng·yuehanxun (Gordon Johnson) thinks that most retail investors in solar energy have little interest in bonds, they do not want to purchase. SolarCity said bonds attracted investors throughout the United States in all 50 States.
Last November, SolarCity released 113 million dollars of convertible bonds, musk has an entity to invest $ 10 million to buy. SolarCity CEO lindeng·Lifu (Lyndon Rive) also bought a $ 3 million bond, Riverside, is the cousin of musk. Riverside, said buying bonds is a good investment, he said: “If you look at bonds with 5-year long-term perspective, I think it should return very well. ”
$ 105 million bond issue in March, SolarCity and SpaceX to swallow the $ 90 million. Mr MASKEY said last year, SpaceX has some maturity, SolarCity bonds can be used to replace, SpaceX has about $ 1 billion in cash positions, latest transaction brings about 10% return, return well.
Musk’s financial manipulation caused the United States Capitol (Capitol Hill) concerns lawmakers worried that federal and SpaceX signed a contract to pay money into the SolarCity. According to people familiar with the matter said, SpaceX rocket project contract from the agent received $ 3.2 billion in capital, legislators want to SpaceX to ensure that the money will not be used for the financing of SolarCity.
United States Congressman daoge·lanboen (Doug Lamborn) submitted an amendment this week to ban money musk of SpaceX SolarCity bond purchases. Provisions aimed at signalling to Mr MASKEY, told Congressional Republicans to pay close attention to his actions. Lamborn said their move is signalled, not to debate or to take real action. Mr MASKEY declined to comment. SpaceX press spokesman responded that the company’s cash balances are not public funds.
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