Tesla's "Going Private" Deal Both EXCITES And SCARES Wall Street Bankers...

Tesla Inc Chief Executive Elon Musk’s contemplated $72 billion take-private deal is presenting investment bankers with a dilemma: overlook concerns about how feasible it is or risk missing out on what could be this year’s biggest and most high-profile acquisition

Musk did not just catch investors and analysts off guard earlier this month by announcing on Twitter he was considering taking the U.S. electric car maker private. He also sent shockwaves throughout the investment banking world, which reacted to the news with both excitement and bewilderment.

This is because no company of Tesla’s size has ever been taken private by financial investors as Musk has suggested, as opposed to being acquired by a bigger company. Moreover, the standard method of doing so, saddling the company with debt in a so-called leveraged buyout, is not an option for Tesla given that is already servicing a debt mountain of some $11 billion and is not making any money. It reported an operating loss in 2017 of $1.6 billion...
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SanJoseDriver - 8/23/2018 3:47:10 AM

0 Boost

Wouldn't say more promising as they haven't manufactured and sold a single car yet--but their first car looks pretty amazing. Hope they can execute, would love to have another solid EV company in Silicon Valley.

TomM - 8/23/2018 6:37:37 AM

+1 Boost

Anyone who thinks that Musk will be successful in taking a company private with 11 billion in Debt already on the books and still not profitable - also believes Trump when he says - believe not what you see - believe what I say you see. It would create a mountain of debt that they never could emerge from. ANd Bankers are not stupid - they understand the bankruptcy laws just as well as Musk does. They are not going to risk that way to get rid of the debt.

It is not going to happen. AND - the fallout from his ill considered announcement is going to cost him LOTS of money personally as well.

PUGPROUD - 8/23/2018 7:25:04 AM

+4 Boost

Investment bankers are in a tizzy because they cannot figure out how they can make money on a deal that has a snowball's chance in hell of happening while at the same time protecting their current money in Tesla and trying to scam ways to make more if it fails or succeeds. Their heads are spinning because the leaders of their firms are demanding answers and ways to profit from this train wreck. Woe is them!

mre30 - 8/24/2018 8:28:34 AM

+1 Boost

I have no crystal ball, but I imagine, based on all of the strange Tesla news of this summer, that once the money managers return from their summer vacations in the South of France and the Hamptons, that they might start to trickle out Tesla sales on "high-volume" days (i.e. days when suckers "buy on the bounce" based on Musk tweeting something moronic like "money back guarantee on Model 3" or "Tesla semi-truck coming soon") - when there are buyers for the stock.

In general, mutual funds and hedge funds don't have to report their holdings but once every three months - so there is the possibility that we will wake up and "retail investors" will be the primary holders and then there will no longer be "big guns" to perhaps buffer the stock price.

supermoto - 8/23/2018 1:14:00 PM

0 Boost

As reported yesterday by Gasparino, the I-bankers involved are saying that if Tesla does not go private it will be forced to restructure debt (i.e. CH 11).

The I-bankers will make money either way - both outcomes will generate many tens of millions (or more) in fees. That is why they are "consulting" right now for free...getting their feet in the door for a piece of whatever happens.