Tesla Inc said on Monday it could seek alternative sources of financing, days after Chief Executive Officer Elon Musk reached a deal with U.S. securities regulators to settle a dispute over his Twitter use, removing an overhang on the stock.
Shares of the electric carmaker rose 2.5 percent to $241 in midday trading on the Nasdaq.
Tesla said in a quarterly filing https://www.sec.gov/Archives/edgar/data/1318605/000156459019013462/tsla-... with the Securities and Exchange Commission that it expects cash generated from its business to be enough to fund its investments and pay down debt for at least the next 12 months, but that it may decide to raise debt to fund growth.
Wall Street has been looking for more details after Musk last week said, "It`s probably about the right time" to raise capital. He was speaking after the electric vehicle maker posted a $700 million loss for the first quarter.
Many analysts had predicted the company would need to raise funds for its expansion, including the Shanghai factory, the upcoming Model Y SUV and other projects.
Musk`s agreement with the SEC on Friday puts the focus back on execution as Tesla tries to ramp up production of its most important vehicle, the Model 3 sedan, and make a profit at the same time.
So far, Tesla has raised funds through bank loans, several rounds of equity sales, issued convertible notes, a $1.8 billion junk bond sale, securitization of its vehicle leases and solar asset-backed notes.
Tesla has raised $15.1 billion through 31 funding rounds, according to data from investor-tracking website Crunchbase https://www.crunchbase.com/organization/tesla-motors/funding_rounds/fund...,
The company has paid off $920 million in debt earlier this year and a $566 million repayment is due in November.
Tesla is rated six notches into noninvestment grade, or junk bond, territory by both Moody`s Investors Service and S&P Global Ratings. Both rating agencies have a negative outlook on the company`s debt.
"If it was just straight debt they`d have to pay a higher interest rate. But convertible investors are willing to pay for some potential future upside in the equity," Geoffrey Dancey, managing partner and portfolio manager at Cutler Capital Management said after Musk`s comments on Wednesday.
"Tesla, of all companies, sells the story of their upside."
Tesla expects capital expenditures of $2 billion to $2.5 billion this year and about $2.5 billion to $3 billion annually for the next two fiscal years, a spokesperson told Reuters.
Tesla`s $1.8 billion junk bond sank half a cent to yield 8.42 percent on Friday, more than 3 percentage points above the bond`s coupon rate of 5.3 percent.
Its spread, or the premium investors demand for the added risk of holding Tesla debt rather than a safer U.S. Treasury security, widened by about 15 basis points to a near-record 611 basis points.
"We may need or want to raise additional funds in the future, and these funds may not be available to us when we need or want them, or at all," Tesla said in the quarterly filing.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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