Politics

Tesla settles in cash $920 mln convertible bond obligation

Reuters

March 1 () - Tesla Inc has paid off a $920 million convertible bond obligation in cash, a company spokesperson said on Friday.

The bond, which matured on Friday, had a $359.87 conversion price, but the electric carmaker's shares closed down 8 percent at $294.79, forcing the company to settle its largest ever debt payment in cash.

Convertible issues give bondholders the right to trade their debt for equity after shares rise over a certain price, allowing holders to benefit from a rising share price, while also offering bond-like protection if it falls.

Although the carmaker's business is cash-intensive and has historically struggled to remain cash flow positive, Musk has said previously that he would not tap equity markets in the near future.

Wall Street analysts, however, have predicted Tesla may need to add to its $9.4 billion debt pile if its cash needs remain significant.

Tesla on Thursday offered for the first time a $35,000 version of its Model 3 sedan and said its global sales would now be online-only.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Reuters

Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

Learn More