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Tesla ups offering of five-year convertibles to $525 million, talk tightened to 1.5%-2%, up 35%
By Rebecca Melvin
New York, May 16 -Tesla Motors Inc.'s planned offering of five-year convertible bonds was upsized to $525 million during marketing Thursday from $450 million, and price talk was tightened to a coupon range of 1.5% to 2% and an initial conversion premium of 35%, according to a market source.
Pricing of the registered convertible deal was originally talked at a 2% to 2.5% coupon and 30% to 35% premium.
The over-allotment option was upsized to $78.75 million of additional notes from $67.5 million.
The deal was set to price after the market close Thursday.
As previously reported, Tesla also planned to price common stock in a separate offering. Chief executive Elon Musk had indicated preliminary interest in purchasing about half of the stock being offered. The two offerings are not contingent upon each other.
In connection with the pricing of the notes, Tesla planned to establish a bond hedge by entering into privately negotiated convertible note hedge transactions with one or more of the underwriters, as well as warrant transactions.
Holders may convert their notes if shares rise to at least 130% of the conversion price. The notes are non-callable with no puts except a fundamental change-of-control put.
Proceeds will be used to repay a Department of Energy loan, for the bond hedge as well as for general corporate purposes.
Goldman Sachs & Co., Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC are the joint bookrunning managers of the notes.
Based in Palo Alto, Calif., Tesla makes and sells fully electric vehicles and electric vehicle powertrain components.
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