By Rebecca Melvin
New York, May 17 -Tesla Motors Inc. priced an upsized $600 million of five-year convertible bonds after the market close Thursday at par to yield 1.5% with an initial conversion premium of 35%, according to a prospectus.
The registered deal was initially talked at $450 million in size, and pricing came at the rich end of 1.5% to 2% coupon talk and a 35% premium. Price talk was tightened during marketing from a 2% to 2.5% coupon and a 30% to 35% premium.
There is an over-allotment option for $60 million of additional notes.
Tesla also priced an upsized 3.93 million shares of common stock at $92.24 per share in a separate offering. The company was initially going to raise 2.70 million shares. The company is making a subsequent private placement of shares to chief executive Elon Musk at the same share price. In all, Musk is buying about $100 million in shares.
In connection with the pricing of the notes, Tesla entered into privately negotiated convertible note hedge transactions with one or more of the underwriters, as well as warrant transactions. The strike price on the warrants is $184.48, which boosts the effective initial conversion premium from the issuer's perspective to 100%.
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.
About $452.4 million of proceeds from both offerings will be used to prepay a DOE loan, about $50.9 million will pay for the bond hedge and remaining proceeds from the offerings plus the subsequent private placement of shares will be for general corporate purposes.
Goldman Sachs & Co., Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC were the joint bookrunners of the notes.
Based in Palo Alto, Calif., Tesla makes and sells fully electric vehicles and electric vehicle powertrain components.
| Issuer: | Tesla Motors Inc.
|
| Issue: | Convertible senior notes
|
| Amount: | $600 million, upsized from $450 million
|
| Greenshoe: | $60 million
|
| Maturity: | June 1, 2018
|
| Bookrunners: | Goldman Sachs & Co., Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC
|
| Coupon: | 1.5%
|
| Price: | Par
|
| Yield: | 1.5%
|
| Conversion premium: | 35%
|
| Conversion price: | $124.52
|
| Conversion ratio: | 8.0306 shares
|
| Calls: | Non-callable
|
| Puts: | No puts
|
| Net share settlement: | Yes
|
| Contingent conversion: | Yes, at 130%
|
| Bond hedge: | Yes, warrants' strike price of $184.48 boosts premium from the issuer's perspective to 100%
|
| Takeover protection: | Yes
|
| Price talk: | 1.5%-2%, up 35%, tightened from 2%-2.5%, up 30%-35%
|
| Pricing date: | May 16
|
| Settlement date: | May 22
|
| Stock symbol: | Nasdaq: TSLA
|
| Stock reference price: | $92.24
|
| Distribution: | Registered
|
| Market capitalization: | $10.6 billion
|
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