By Rebecca Melvin
New York, Feb. 28 - Tesla Motors Inc. priced an upsized $2 billion of convertible senior notes at par in two tranches of five-year and seven-year paper, with pricing accomplished at the rich end of talk, according to a syndicate source.
There is a greenshoe for up to $300 million, or $120 million for the shorter-dated tranche and $180 million for the longer-dated paper. Initially, the base deals were expected to be $1.6 billion in size, or $800 million for each tranche, with greenshoes of $120 million each.
The five-year tranche for $800 million has a 0.25% coupon, which was fixed during marketing from an initially talked 0.25% to 0.75% coupon.
The seven-year tranche for $1.2 billion has a 1.25% coupon, which was fixed during marketing from a talked 1.25% to 1.75% coupon.
Both tranches have 42.5% initial conversion premium, which was the rich end of 37.5% to 42.5% talk.
Goldman Sachs & Co., Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC and Deutsche Bank Securities Inc. were joint bookrunners of the registered deal.
Holders may convert their notes if shares rise to at least 130% of the conversion price. The notes are non-callable with no puts except a fundamental change-of-control put.
In connection with the pricing of the notes, Tesla established a bond hedge by entering into privately negotiated convertible note hedge transactions with one or more of the underwriters, as well as warrant transactions.
The strike on the capped call transactions is $512.6562 for the 2019 notes and $560.6388 for the 2021 notes, which raises the initial conversion premium from the issuer's perspective to 85% for the shorter notes and 98% for the longer notes.
Proceeds will be used to accelerate growth of its business in the United States and internationally, for development and production of a mass market vehicle, the development of the Tesla Gigafactory and other general corporate purposes, and also to pay the net cost of the convertible note hedge transactions.
Pending those uses, the company plans to invest proceeds in highly liquid cash equivalents or U.S. government securities.
Based in Palo Alto, Calif., Tesla makes and sells electric vehicles and electric vehicle powertrain components.
| Issuer: | Tesla Motors Inc.
|
| Issue: | Convertible senior notes
|
| Bookrunners: | Goldman Sachs & Co., Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC, Deutsche Bank Securities Inc.
|
| Amount: | $2 billion, upsized from $1.6 billion
|
| Greenshoe: | $300 million, upsized from $240 million
|
| Conversion premium: | 42.5%
|
| Conversion price: | $359.87
|
| Conversion ratio: | 2.7788
|
| Dividend protection: | Yes
|
| Takeover protection: | Yes
|
| Call protection: | Non-callable
|
| Puts: | None
|
| Contingent conversion: | Yes, at 130% price hurdle
|
| Net share settlement: | Yes
|
| Pricing date: | Feb. 27
|
| Settlement date: | March 5
|
| Distribution: | Registered
|
| Stock symbol: | Nasdaq: TSLA
|
| Stock reference price: | $252.54, as of close Feb. 27
|
| Market capitalization: | $30.56 billion
|
|
|
| Notes due 2019
|
| Amount: | $800 million
|
| Greenshoe: | $120 million
|
| Maturity: | March, 1, 2019
|
| Coupon: | 0.25%
|
| Price: | Par
|
| Yield: | 0.25%
|
| Price talk: | 0.25%-0.75%, up 37.5%-42.5%
|
| Capped call: | Yes, strike at $512.6562, raises premium to 85% from issuer's perspective
|
|
|
| Notes due 2021
|
| Amount: | $1.2 billion, upsized from $800 million
|
| Greenshoe: | $180 million, upsized from $120 million
|
| Maturity: | March 1, 2021
|
| Coupon: | 1.25%
|
| Price: | Par
|
| Yield: | 1.25%
|
| Price talk: | 1.25%-1.75%, up 37.5%-42.5%
|
| Capped call: | Yes, strike at $560.6388, raises premium to 98% from issuer's perspective
|
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