Tesla shares soar after hours on offering plans

Tesla plans stock and notes offering to repay federal loan, Musk to increase stake

Associated Press

Tesla Motors Inc. on Wednesday said it is planning a stock and notes offering that includes plans for its CEO and co-founder, Elon Musk, to buy a chunk of the shares himself.

The news sent Tesla's stock up nearly 7 percent in after-hours trading, extending the rally in stock of the maker of pricy electric cars.

Tesla said that it will offer 2.7 million shares of its common stock and $450 million in convertible senior notes. The company has also given underwriters the option to buy another 405,454 shares of stock and $67.5 million in notes.

Musk plans to buy $100 million worth of shares at the same public offering price. About $45 million will be purchased in the offering and $55 million will be purchased directly from Tesla. He currently holds about 27 million shares, nearly 24 percent of the company's outstanding shares.

Tesla intends to use the net proceeds from the offerings to prepay its outstanding loan from the Department of Energy, pay the cost of convertible note hedge transactions and for general corporate purposes. The company expects gross proceeds of $830 million from the two offerings and Musk's purchase. It didn't give details on the timing or the price of the offering.

The moves signal another vote of confidence in the company's potential.

Tesla's shares have soared since last week when it reported its first-ever profitable quarter since it was founded in 2003. Musk has said he expects the company, which went public in 2011, will prove profitable this year on growing sales of its Model S sedan.

The company, based in Palo Alto, Calif., has enjoyed some acclaim for its Model S, which went on sale last summer. It is preparing for the 2014 debut of its second vehicle, the Model X SUV. Tesla also made a major engineering hire earlier this month from Aston Martin.

While investors are bullish on Tesla, it still faces a huge obstacle: the lack of an electric vehicle infrastructure on U.S. roads. It has built a number of supercharging stations and plans to add to that in coming years

The company's stock value has jumped 57 percent this month alone. It rose nearly 2 percent to close regular trading at $84.84 Wednesday and tacked on $5.64 to $90.48 in after-hours trading.

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