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So glad I own TSLA!!!

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  • Dec 18th, 2018 1:56 pm
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Didn't read any references cited but good to know people are on top of things.

What's this $200 stock price and then going private about?

Any bond convenants directly related to stock price?
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alanbrenton wrote:
Sep 28th, 2018 8:35 am
Didn't read any references cited but good to know people are on top of things.

What's this $200 stock price and then going private about?

Any bond convenants directly related to stock price?
They have convertible debentures that either convert to common equity at a specific strike price on a specific date; if that doesn't happen then they have to be repaid. I think the next big one is due in 2019.

I'm not sure about the covenants - would be an interesting thing to look into - even to see what they are as it would set a good context for the upcoming Q3 ER.
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alanbrenton wrote:
Sep 28th, 2018 8:35 am
Didn't read any references cited but good to know people are on top of things.

What's this $200 stock price and then going private about?

Any bond convenants directly related to stock price?
$360 strike on 19's and 21 convertible's. "Change of control" and "callable" on the straight 25's. Tesla isn't going to call this issue. COC covenants are not uniform from country to country nor bond to bond, although there has been harmonization with recent issues.


source: https://www.barrons.com/articles/tesla- ... 1533667505
attached bond prices via FINRA
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  • Tesla 19s.JPG
  • Tesla 25s.JPG
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thematrix49 wrote:
Sep 28th, 2018 2:09 am
Tesla fanatics don't read anything unless it is in the form of a 'tweet'
< 240 characters!!! :)
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MrMom wrote:
Sep 28th, 2018 9:06 am
$360 strike on 19's and 21 convertible's. "Change of control" and "callable" on the straight 25's. Tesla isn't going to call this issue. COC covenants are not uniform from country to country nor bond to bond, although there has been harmonization with recent issues.


source: https://www.barrons.com/articles/tesla- ... 1533667505
attached bond prices via FINRA
Nub question then, is it possible Musk is kinda "motivated" to have TSLA share price as much lower from $360 in 2019 (and 2021) then? E.g the more difference between this convertible price and market price the better???

That could explain all this "sudden" tweet eruption, public MJ smoke etc, which hurts the stock price (but not the Musk's payout more tied to delivery now)...the worse - the better?
Make the Trudeau drama teacher again!
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asa1973 wrote:
Sep 28th, 2018 11:50 am
Nub question then, is it possible Musk is kinda "motivated" to have TSLA share price as much lower from $360 in 2019 (and 2021) then? E.g the more difference between this convertible price and market price the better???

That could explain all this "sudden" tweet eruption, public MJ smoke etc, which hurts the stock price (but not the Musk's payout more tied to delivery now)...the worse - the better?
He wants to pay back the bond holders with what, free EAP and AP?
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alanbrenton wrote:
Sep 28th, 2018 12:25 pm
He wants to pay back the bond holders with what, free EAP and AP?
As I said, I do not really understand those covenants tied? to stock price. Plain bonds is no brainer, you borrowed 300m, so you payback 300m plus interest.
This one as I understand it, was borrowed 1m of shares, paid 360m at the moment. So at the payout borrower has to get to lender this 1m shares. If they wil be priced below 360 at THAT moment, the borrower will get the profit, not the lender. Correct me if I'm wrong (quite possibly)
Make the Trudeau drama teacher again!
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alanbrenton wrote:
Sep 28th, 2018 12:25 pm

He wants to pay back the bond holders with what, free EAP and AP?
As I said, I do not really understand those covenants tied? to stock price. Plain bonds is no brainer, you borrowed 300m, so you payback 300m plus interest.
This one as I understand it, was borrowed 1m of shares, paid 360m at the moment. So at the payout borrower has to get to lender this 1m shares. If they wil be priced below 360 at THAT moment, the borrower will get the profit, not the lender. Correct me if I'm wrong (quite possibly)
Make the Trudeau drama teacher again!
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asa1973 wrote:
Sep 28th, 2018 11:50 am
Nub question then, is it possible Musk is kinda "motivated" to have TSLA share price as much lower from $360 in 2019 (and 2021) then? E.g the more difference between this convertible price and market price the better???

That could explain all this "sudden" tweet eruption, public MJ smoke etc, which hurts the stock price (but not the Musk's payout more tied to delivery now)...the worse - the better?
As I understand it, the strike price is black and white - either the share is at / above the strike price or it's not. If it's not, he has to pay the debt back with cash. If it's at / above strike price he can pay the debt back by converting the debenture to common shares, which means no cash comes from Tesla's balance sheet.

If I was in his situation, I would NOT want the stock price lower as it's far easier to just issue more shares to cover debt repayments rather than paying the debt with cash that Tesla may or may not have.

Furthermore he's also borrowed money from investment banks to buy more Tesla shares and he's rumoured to face a margin call at around ~ $260, so if the price drops lower not only does it impact his corporate but also his personal accounts.
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asa1973 wrote:
Sep 28th, 2018 1:53 pm
As I said, I do not really understand those covenants tied? to stock price. Plain bonds is no brainer, you borrowed 300m, so you payback 300m plus interest.
This one as I understand it, was borrowed 1m of shares, paid 360m at the moment. So at the payout borrower has to get to lender this 1m shares. If they wil be priced below 360 at THAT moment, the borrower will get the profit, not the lender. Correct me if I'm wrong (quite possibly)
These convertible bonds give the holders the option to switch to equity at the exercise price.

If the stock price is trading below the exercise price, the bond is just like a regular bond -- interest, collateral/security, etc.

So Tesla will have to pay these back upon maturity.

If Tesla had lots of liquidity, they could be redeeming these bonds at discounted values but I don't think they have lots of excess cash at the moment.
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The conversion price and ratio are set. Whether a Convertible bond holder chooses to convert is at their option, but it's pretty simple to figure out whether they would want to or not. From Musks actions and statements about short sellers, he seemed pretty intent on keeping the share price higher rather than lower.

Come March 1, 2019, Tesla will have to have enough cash or credit to make a coupon payment and repay the $920M principal should no holders elect to convert to equity. They actually will know in advance as bond holders will have to elect what they want to do beforehand. That deadline will be spelled out in the prospectus.
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OK, seems I got it wrong, and at least from bond prospective, for TSLA it makes more sense to have stock price above 360
which would effectively let the electric-auto maker pay off that obligation in stock instead of cash.
or they
will have to have enough cash or credit to make a coupon payment and repay the $920M principal should no holders elect to convert to equity
P.s. http://doc.morningstar.com/document/a82 ... d85.msdoc/ requires a login :) However I think this prospectus should be available though other sources as well...
Make the Trudeau drama teacher again!
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MrMom wrote:
Sep 28th, 2018 2:17 pm
The conversion price and ratio are set. Whether a Convertible bond holder chooses to convert is at their option, but it's pretty simple to figure out whether they would want to or not. From Musks actions and statements about short sellers, he seemed pretty intent on keeping the share price higher rather than lower.

Come March 1, 2019, Tesla will have to have enough cash or credit to make a coupon payment and repay the $920M principal should no holders elect to convert to equity. They actually will know in advance as bond holders will have to elect what they want to do beforehand. That deadline will be spelled out in the prospectus.
You are right. It's at a certain fixed ratio, lol.
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There's more referencing the trust indenture, but this s/b good enough for this forum.

"Subject to satisfaction of certain conditions and during the periods described below, the 2019 notes may be converted at an initial conversion rate of 2.7788 shares of common stock per $1,000 principal amount of 2019 notes (equivalent to an initial conversion price of approximately $359.87 per share of common stock) and the 2021 notes may be converted at an initial conversion rate of 2.7788 shares of common stock per $1,000 principal amount of 2021 notes (equivalent to an initial conversion price of approximately $359.87 per share of common stock). The conversion rates with respect to the 2019 notes and the 2021 notes are subject to adjustment if certain events occur."

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