Tesla Raising $1.6 Billion in Convertible Note Offering

Tesla Motors Inc. (NASDAQ: TSLA) is going to the capital markets for a serious capital raise. Elon Musk’s electric vehicle maker is planning to raise $1.6 billion in a convertible senior note offering.

The first $800 million traunch will mature in 2019, while the second $800 million convertible note traunch will mature in 2021. Underwriters include Goldman Sachs, Morgan Stanley, J.P. Morgan and Deutsche Bank Securities.

Tesla plans to use the proceeds to help pay the cost of the convertible note hedge transactions in connection with this offering, but mainly to produce its “Gen III” mass market vehicle and for the development of the Tesla Gigafactory. Other general corporate purposes were also included.

While this is likely to add at least some pressure on Tesla’s stock price, Tesla shares hit an all-time high of $265.00 and closed at $253.00 on Wednesday. Keep in mind that the 52-week low was $34.25, so Tesla’s runaway rally has been exponential.

Elon Musk may not have won fans who just bought Tesla today, but he is proving to be rather opportunistic when he raises cash.

Tesla shares were not even down 1% in the after-hours of this report. Its market cap at the close was just over $31 billion. Tesla’s filing showed some forward plans as follows:

We are adapting the platform architecture of Model S to develop our Model X crossover. This unique vehicle has been designed to fill the niche between the roominess of a minivan and the style of an SUV, while having high performance features such as a dual motor all-wheel drive system. We revealed a prototype of Model X in February 2012. We currently expect to have production design Model X prototypes on the road by end of year and begin volume deliveries to customers in the spring of 2015. We have also publicly announced our intent to develop a third generation electric vehicle, to which we refer as “Gen III”, which we intend to offer at a lower price point and produce at higher volumes than our Model S in approximately three years.

We are also building a network of Superchargers in the United States and Europe to enable free and convenient long distance driving. Superchargers allow Model S owners to replenish 50% of the battery pack in as little as 20 minutes. Supercharger stations are strategically placed along well-travelled highways to allow Model S owners to enjoy long distance travel with convenient, minimal stops. As of February 19, 2014, we had 90 Supercharger stations open in North America and Europe. We plan to continue to open Supercharger stations in these regions as well as in Asia during 2014 and expect to triple our Supercharger stations during 2014. We expect that Model X and our future cars will be able to use this network.

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