Tesla talks $1.35 billion five-year convertibles to yield 1.5%-2%, up 27.5%-32.5%

By Abigail W. Adams

Portland, Me., May 2 – Tesla Inc. plans to price $1.35 billion of five-year convertible notes after the market close on Thursday with price talk for a coupon of 1.5% to 2% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

Goldman Sachs & Co. LLC and Citigroup Global Markets Inc. are active bookrunners for the registered offering, which carries a greenshoe of $202.5 million.

Deutsche Bank Securities Inc., BofA Merrill Lynch, Morgan Stanley & Co. LLC, Credit Suisse Securities (USA) LLC, Societe Generale and Wells Fargo Securities LLC are joint bookrunners.

The notes are non-callable. They are putable upon a fundamental change.

In connection with the pricing of the notes, Tesla will enter into convertible note hedge transactions.

The notes are pricing concurrently with a $630 million, or 2,723,198 common stock, offering, which carries a greenshoe of 408,479 shares.

Net proceeds from the convertible notes offering are expected to be $1.3 billion, or $1.5 billion if the greenshoe is exercised in full.

Net proceeds from the combined offerings are expected to be $2 billion, or $2.3 billion if the greenshoe is exercised in full.

Proceeds will be used to cover the cost of the call spread, to strengthen its balance sheet and for general corporate purposes.

Tesla is a San Carlos, Calif.-based automotive and energy company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.