Tesla Board 'Totally Blindsided' by Musk's Suggestion to Take Company Private

Marcus Newton
August 15, 2018

Musk justifies the Saudi interest in electric vehicles and his company with their need to "diversify away from oil".

Musk's effort to associate his potential bid with some of Wall Street's most venerable institutions, even at the risk of misrepresenting their involvement, comes as pressure has been building on him to justify his pronouncement last week about the "secured" funding.

Securities lawyers said USA law requires executives and companies to have a "reasonable basis" on which to make statements, meaning the fact Musk said he believed he had secured a verbal agreement for the funding after the July 31 meeting could put him on a firmer footing with the SEC.

In a statement earlier Monday, Musk also shared more details about who might fund such a deal. Musk further claimed that he had the "funding secured" to take the company private, an act that would cost up to $70 billion.

The Saudi fund over almost two years had approached him repeatedly about taking the company private, Musk said, and the latest meeting came after it took a almost 5 percent stake in Tesla. All those interested, including the Securities and Exchange Commission (SEC), wanted to know precisely what that means.

On Monday, he said the financing referred to talks he has had with Saudi Arabia's sovereign wealth fund.

The committee has the authority to evaluate and negotiate a potential deal, or any alternatives proposed by Mr. Musk, on the board's behalf, Tesla said.

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Goldman Sachs declined to comment.

But a source said Silver Lake was offering its assistance to Musk without compensation and had not been hired as a financial adviser in an official capacity.

The decision to announce the plan, which Musk has since expanded upon, via Twitter "had not been cleared ahead of time with the company's board", The Times wrote.

Denholm, the first woman on Tesla's board, is chief operations officer of telecom firm Telstra and the ex-CFO of network gear maker Juniper Networks (JNPR.N).

Tesla's other board members include Musk; his brother Kimbal Musk; Twenty-First Century Fox's CEO James Murdoch; Antonio Gracias, founder of Valor Equity Partners; and Ira Ehrenpreis, founder of venture capital firm DBL Partners.

Latham and Watkins LLP has been retained by the committee as its legal counsel.

Other reports by MaliBehiribAe

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