Tuesday, August 8, 2017

Tesla's Balance Sheet (TSLA)

The stock is up $12.46  (+3.51%) at $367.63.
From Bloomberg:

Tesla Plans $1.5 Billion Bond Market Debut to Fund Model 3
Having tapped the equity market eight times for capital over the past seven years to fund Tesla Inc.’s growth -- and cover its losses -- Elon Musk is turning to the bond market.
Needing cash to finance his audacious bet on the mass production of a more affordable electric car, the Model 3, Musk plans to sell $1.5 billion of eight-year bonds. Tesla officials are meeting with investors across the U.S. this week to drum up demand. The debt sale will test Musk’s ability replicate the fervent following he’s built among stock investors, who’ve bought into his vision of a clean-energy future and pushed the shares up 67 percent this year.
While bond markets have been running at historically frothy levels, Tesla is asking potential noteholders to overlook the company’s negative cash flow and its repeated trips to capital markets to bolster its balance sheet.

This would be the company’s first sale of non-convertible bonds, according to data compiled by Bloomberg. During early conversations with investors, Tesla has been offering to pay around 5 percent on the notes, according to two people with knowledge of the matter, who asked not to be identified as the discussions are private. That lines up with the 5.4 percent investors are demanding for junk-rated companies, according to Bloomberg Barclays index data....
The bond sale is the latest in a series of moves Tesla made to pad its coffers this year. The company raised about $1.4 billion in March through a stock and debt offering and in June expanded credit agreements by a combined $800 million. Those credit agreements are senior to the bonds Tesla is now selling.

“There is a well-developed track record of successful investments and generating returns on those investments,” said James Albertine, a senior analyst at Consumer Edge Research who has a buy rating on Tesla shares. “Tesla’s a company that’s always on to the next big innovation or the next big advancement and they raise money well in advance of when the public finds out about that.”
Tesla ended the second quarter with a little more than $3 billion in cash, the lowest on hand in more than a year. The carmaker said last week it expects about $2 billion in capital expenditures in the second half of the year as it spends on Model 3 equipment, its battery gigafactory and the expansion of its supercharger network....MORE