Elon Musk faces cash squeeze at Tesla and SolarCity
Two pillars of Elon Musk’s empire are facing financial crunches as the entrepreneur seeks to combine the two companies through a controversial acquisition.
Tesla Motors Inc., which makes electric cars, disclosed in a securities filing Wednesday that it has to pay $422 million to its bondholders in the third quarter, and that it will raise additional money by the end of the year. The purpose of the additional capital, among other things, is to support its proposed merger with home-solar company SolarCity Corp. Mr. Musk is the chairman of both companies.
The filing also revealed that in recent weeks, 15 institutional investors passed on either acquiring SolarCity or injecting equity into it. The company is having difficulty tapping the public markets amid the proposed merger and is facing a liquidity squeeze, the filing indicated. SolarCity’s cash declined to $146 million on June 30, from $421 million a year earlier, the company has reported.
Mr. Musk ignited controversy in June when he proposed combining the two companies. Detractors characterized the proposal as a bailout for SolarCity. Mr. Musk said the deal will save money and create a more diverse company focused on batteries, solar energy, automobiles and heavier vehicles.
In an interview Wednesday, Mr. Musk said that he had envisioned Tesla’s role in solar energy back in 2006 when he laid out his initial plan for the auto maker. The combination of the companies, he said, is intended to remove conflicts of interest created when the separate entities do business with one another.
A Tesla spokeswoman said the merger was “the best way for Tesla to bring an integrated clean energy product to market.”
i am sure somebody will bail him out..maybe the same ones who they owe money to..or perhaps a lending hand from nasa and their deep pockets?