Tesla is reportedly in early discussions with banks about funding to go private
Tesla is in early discussions with some potential investors about the possibility of taking the company private, Bloomberg reports.
According to the publication, the company is looking for a number of investors, rather than seeking a few, large stakeholders. Tesla has begun discussions with some potential investors and is talking with banks about the whether it will be able to make a deal and what that deal might look like, but it hasn't hired a bank to formally assist in the process, Bloomberg reports.
The report appears to contrast with tweets from Musk on Tuesday, in which he said funding to take the company private was "secured" and indicated that a shareholder vote was the final step needed to finish a deal. According to Bloomberg, sources close to 16 financial firms and technology companies were not aware of backing that was arranged before Musk sent his first tweet.
Tesla did not immediately respond to Business Insider's request for comment.
Nearly three days after Tesla CEO Elon Musk said he had secured the funding necessary to take Tesla private, pending a shareholder vote, neither he nor the company has disclosed where that money could come from.
"Am considering taking Tesla private at $420. Funding secured," Musk said on Tuesday via Twitter before issuing a formal statement on Tesla's website.
"Investor support is confirmed. Only reason why this is not certain is that it's contingent on a shareholder vote," he later said.
While Tesla's board released a statement on Wednesday saying Musk had discussed the prospect of going private with them last week, Reuters reported on Thursday that Musk had yet to tell the board where the backing for a buyout deal would come from, citing a source familiar with the matter.
Musk's failure to clarify his tweets indicating Tesla is a shareholder vote away from becoming a private company is a problem, James Rosener, a partner at the law firm Pepper Hamilton who specializes in private equity and corporate financing, told Business Insider.
"The fact that there has been no announcement clarifying, confirming, or denying the financing is surprising and puts Tesla and Musk at great risk," he said in an email.
That risk includes the possibility of fines from the Securities and Exchange Commission, or even criminal prosecution, said Harvey Pitt, who served as SEC chairman from 2001 to 2003.
"This whole course of events is highly problematic," he said.
The Wall Street Journal reported on Wednesday that the SEC made an inquiry into Tesla about whether one of Musk's tweets regarding the possibility of taking the company private was truthful. And on Thursday, Bloomberg reported that the agency was "intensifying" its inquiry.
This is a developing story. Check back for updates.