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Elon Musk Says Saudi Fund Desired to Take Tesla Private


Elon Musk testified on Monday in federal court that Saudi Arabia’s sovereign wealth fund had “unequivocally desired to take Tesla private” in 2018, maintaining that the fund’s interest within the deal meant that he had not lied or misspoken about his plan to take the automaker off the stock market.

Investors are suing Mr. Musk, Tesla and the corporate’s board because they contend that they lost money in consequence of Mr. Musk’s statements about his plan to take Tesla private, which later collapsed.

On Aug. 7, 2018, Mr. Musk, who was chairman and chief executive of the automobile company on the time, wrote on Twitter: “Am considering taking Tesla private at $420. Funding secured.” Mr. Musk then wrote: “Investor support is confirmed. Only reason why this shouldn’t be certain is that it’s contingent on a shareholder vote.” Tesla’s share price jumped after those posts but later fell because the proposal fizzled out.

How jurors interpret Mr. Musk’s statements and the effect that they had on investors might be critical to the end result of this case, which is being tried in San Francisco. A victory for investors could mean Mr. Musk and Tesla would should pay billions of dollars in damages. But winning the case would allow Mr. Musk to assert vindication against his critics.

The judge overseeing the case, Edward M. Chen, has already ruled that “funding secured” and Mr. Musk’s second statement about taking Tesla private were unfaithful.

Mr. Musk’s testified concerning the Saudi fund, the Public Investment Fund, in response to questions by a plaintiff’s lawyer who pressed him for more details concerning the plan to take the corporate private. Mr. Musk said officials from the Saudi fund had not signed documents committing to a deal or discussed how much they might spend money on the deal.

“The precise amount wouldn’t be knowable without knowing who else would participate,” he said. But he added that he believed “in the event that they say they’re going to do something, they do.”

Removing a public company from the stock exchange could be expensive and difficult. The people or investment firms searching for to take a business private should give you the cash to purchase all or most of its stock.

The Saudi fund, which had amassed a 5 percent stake in Tesla before Mr. Musk announced his plans, would have been a very important a part of any deal. Mr. Musk had long claimed the Saudi investors were committed to the transaction, and communications contained in court filings showed that Mr. Musk criticized Saudi officials after news reports suggested that they were lukewarm a few deal.

Mr. Musk and Tesla’s legal team unsuccessfully tried to compel the fund’s employees to testify within the trial. This month, the fund’s lawyers called the subpoenas “legally deficient” and “frankly, frivolous.” A spokesman for the fund didn’t immediately reply to a request for comment on Monday.

Mr. Musk testified that “funding secured” referred not simply to financing from the Saudi fund but in addition to his stake in SpaceX, a rocket company where he can be chief executive. Mr. Musk could theoretically have borrowed against his stake in SpaceX or sold a few of that stock to give you the cash needed to take Tesla private.

“That is an especially necessary point, and also you appear to be deliberately avoiding it,” Mr. Musk said to Nicholas Porritt, a lawyer for the plaintiffs. But under questioning from Mr. Porritt, Mr. Musk acknowledged that he had not mentioned his SpaceX shares as a possible funding source in a 2021 deposition.

When asked whether he had priced Tesla at $420 per share because it will be “a joke your girlfriend would enjoy,” Mr. Musk said, “There’s some karma around $420, though I should query whether that is nice or bad karma at this point.” He then added that he had picked $420 since it was about 20 percent greater than Tesla’s share price on the time.

Mr. Musk, wearing a dark suit and black surgical mask, entered the courtroom and walked straight to the witness stand. He watched the jurors as they walked in and nodded to them. Mr. Musk, who said that he “had trouble sleeping last night” and that his back was hurting, sometimes pushed back at how Mr. Porritt asked questions. Judge Chen told Mr. Musk at the very least thrice that he had not answered the lawyer’s questions or that he had gone off topic.

The plaintiffs’ lawyers have argued that individuals made investment decisions because Mr. Musk said he had obtained the funding needed to take Tesla private and had investor support for the deal. But lawyers for Mr. Musk and Tesla have said it is feasible investors made decisions based on Mr. Musk’s statement that he was considering taking Tesla private — a press release his lawyers claim was true.

Legal experts have said most firms and chief executives would probably have settled a case like this. But Mr. Musk has often shown a willingness to let lawsuits filed against him and Tesla go to trial.

In testimony on Friday, Mr. Musk acknowledged that his Twitter account provided necessary details about Tesla and that it needed to follow rules from the Securities and Exchange Commission. But he denied that his social media posts were answerable for swings in Tesla’s share price. He also said he couldn’t be as comprehensive on Twitter as Tesla might be in S.E.C. filings and news releases.

Mr. Musk also said that his friends, in addition to Tesla’s executives and investors, had suggested that he take a break from Twitter before he posted about taking Tesla private.

In 2018, Mr. Musk and Tesla settled a separate lawsuit with the S.E.C. about his proposal to take Tesla private. They paid fines to the S.E.C., and Mr. Musk agreed to resign as Tesla’s chairman and to permit a lawyer to review certain statements concerning the company before posting them on social media.

The trial began three months after Mr. Musk acquired Twitter. Since then, he has fired most of its employees, modified its content rules and allowed previously banned or suspended users back onto the platform.

Soon after efforts to take Tesla private resulted in 2018, the corporate began to provide large numbers of cars, which drove its stock higher and made it easier for Tesla to boost billions of dollars by selling shares. But the corporate’s share price plunged last yr as Mr. Musk sold shares to finance his acquisition of Twitter and as Tesla faced stiffer competition.

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