SAN FRANCISCO (Reuters) – Tesla CEO Elon Musk personally owes $ 507 million to Wall Street banks involved in Tesla's equity and debt sales, backed by his stake in the electric car manufacturer.
The loans were published in Tesla's prospectus on Thursday to raise $ 2.3 billion with new shares and convertible debt, and it was $ 117 million less than Musk's personal loans described in Tesla's earlier prospectus in 2017
Nevertheless, Tesla said that if the price of the stock falls and the banks force Musk to sell some of its shares, this could create further pressure on the stock.
Tesla skipped 4% after the company announced capital acquisition plans, which reassured investors' recent concerns about Palo Alto, the California company and pulled up the shares from two years of decline.
Musk, who owns 20% of Tesla, has taken personal loans from the Wall Street banks for years. A prospectus from Tesla 201
On Tuesday's filing, Musk showed money to three banks that worked on the capital increase.
Goldman Sachs has $ 213 million in outstanding loans to Musk while owing Morgan Stanley $ 209 million, and another $ 85 million to Bank of America Corp. Goldman was not mentioned as a personal lender to Musk in the 2017 filing.
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These loans are supported by Musk's shares in Tesla, currently worth a total of about $ 8 billion . If Tesla's shares decline, Musk may be forced to sell some of these shares under loan terms, according to Tesla filing.
Mark Williams, Professor of Economics at Boston University, said that investment banks could enter into conflicts of interest with their dealings with companies, their founders, and CEOs, and test the rules to keep separate businesses separate.
"This is especially true of Tesla, where you have an aggressive and vocal CEO who tends to push the legitimate boundaries and get conditions that may conflict with Goldman's interest policy," Williams said.
Goldman and Citigroup Inc, the top executives of Thursday's capital increase, have both "sold" ratings on Tesla's stock, which is unusual but not exceptional on Wall Street.
By the end of 2018, Musk and his trust had 13.4 million Tesla shares pledged. as security for personal debt, according to another filing, down from 13.8 million shares at the end of 2017.
Tesla, Morgan Stanley and Goldman Sachs refused to talk about the loans, and Tesla has a policy that governs the management's loan at A quarter of the value of the shares pledged as collateral.
When Tesla repeatedly presses forecasts to profit, the stock has fallen 27% year on year.
Musk plans to buy further $ 10 million shares as part of the sale announced on Thursday.
Reporting of Noel Randewich in San Francisco, additional reporting by Elizabeth Dilts, Kate Duguid and Lauren Tara LaCapra in New York; Editing by Lisa Shumaker