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Tesla Shares Rise On Plan To Raise $2 Bln In Capital


Shares of Tesla Inc. (TSLA) are rising almost 4 percent in Thursday's trading after the luxury electric car maker announced plans to raise $2 billion in capital through the sale of additional shares of common stock and convertible notes.

In a regulatory filing, Tesla said it is offering 2.72 million shares in a new offering. Based on the stock's closing price of $238.69 on April 30, the offering could raise $650 million.

Tesla noted that Chief Executive Officer Elon Musk has indicated preliminary interest in buying up to 41,896 shares of the company's common stock for about $10 million. Musk is currently Tesla's largest shareholder and owns about 20 percent of the company.

Concurrent with the offering of common stock, Tesla is also offering convertible senior notes due 2024 to the public in an aggregate principal amount of $1.35 billion, or $1.55 billion if the underwriters fully exercise their option to buy additional notes.

The closing of both the offerings are not contingent upon the closing of each other.

Tesla said in the filing that it expects to receive net proceeds from the offerings of about $2.0 billion, or up to $2.3 billion if the underwriters exercise in full their options to purchase additional common stock and notes. The company intends to use the net proceeds to further strengthen its balance sheet as well as for general corporate purposes.

Goldman Sachs and Citigroup are the lead underwriters on the offerings, while BofA Merrill Lynch, Deutsche Bank Securities, Morgan Stanley and Credit Suisse will be additional book-running managers.

During the company's quarterly conference call last week, Musk said, "I don't think raising capital should be a substitute for making the company operate more effectively. I do think there is some merit to raising capital, but this is sort of probably about the right timing."

At the end of the recent first quarter, Tesla had a little more than $2 billion in cash on its balance sheet.

Tesla reported a loss for the first quarter that was wider than analysts' estimates, while revenues also missed expectations.

The company's loss for the quarter was $702.1 million or $4.10 per share, compared to last year's loss of $709.6 million or $4.19 per share. Adjusted loss was $2.90 per share, while analysts expected the company to report loss of $0.69 per share. Revenues for the quarter surged to $4.54 billion from $3.41 billion last year.

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