PALO ALTO, Calif. — A week after posting a huge first quarter loss and saying the company needs to raise cash, Tesla is doing just that, and CEO Elon Musk will buy $10 million worth of stock with his own money in an $1.5 billion offering of shares and convertible notes.
Tesla said Thursday that it's offering $650 million of common stock and $1.35 billion in convertible senior notes due in 2024 in two separate offerings.
The company anticipates gross proceeds of about $2.3 billion, before discounts and expenses.
Last week, Tesla reported its cash balance at the end of the first quarter shrunk by $1.5 billion since December, to $2.2 billion. Musk said during a conference call that Tesla might need to raise capital again.
Shares of Tesla, which had recently hit a two-year low, jumped 5 percent to $245 in early trading after it unveiled the plans, which follow Musk's hint last week that a capital raise was imminent after the electric carmaker lost $700 million in the first quarter.
Analysts have been predicting for months that Tesla would need to raise money for its expansion plans, which include the construction of a factory in Shanghai, the upcoming Model Y SUV, and other projects.
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. It ended its first quarter with $2.2 billion in cash.
"Both bulls and bears alike that we speak to see it as highly likely that Tesla will seek to raise equity capital sufficient in amount to quell questions about its potential financing needs," Morgan Stanley analysts wrote in a note dated April 30.
So far, Tesla has raised money 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.
Goldman Sachs and Citigroup will manage the offering, with BofA Merrill Lynch, Deutsche Bank Securities, Morgan Stanley and Credit Suisse will be additional book-running managers.
Material from Reuters was included in this report.
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