Elon Musk Starts the Week by Putting Out Fires

A truly bizarre rumor is just one of the issues facing Tesla CEO Elon Musk as questions swirl following the August 7th announcement that he wants to take the publicly traded company private.

As the U.S. Securities and Exchange Commission looks into Musk’s claim that there’s “funding secured” for the potential buyout, Musk was forced to confront a claim involving, of all things, a rapper, drugs, and spontaneous tweeting. Always a sideshow with this company…

The financial world, on the other hand, wants to know more about this Saudi business.

First off, the salacious stuff. Controversial, outspoken rapper Azealia Banks took to Instagram to accuse Musk of sending out his Aug. 7 going-private tweets after consuming the substance that made the San Francisco Bay music scene so trippy in the late ’60s. She claims that, while staying at his place on the weekend at the request of Grimes, Musk’s performing artist girlfriend, she observed the CEO “scrounging for investors,” apparently out of desperation. Wild stuff from a rapper infamous for saying wild stuff.

Musk told Gizmodo he “has never even met [Banks] or communicated with her in any way.”

With that out of the way, our focus turns to the Tesla buyout deal. Earlier Monday morning, Musk claimed in a blog post that Saudi Arabia’s sovereign wealth fund would be the source of much of the funds needed to take Tesla private at $420 a share. Meetings were held, he wrote, leaving him feeling confident that such a deal could be carried out. A meeting with Tesla’s board of directors was held on Aug. 2, five days before his tweets and subsequent announcement.

However, the New York Times, citing unnamed sources, reports that Musk’s tweets “blindsided” the board, whose members had not cleared the announcement. This immediately prompted scrutiny from the SEC, which wanted to know why Musk hadn’t made this announcement through proper channels, like a regulatory filing. Normally, a company would mention the sum of the secured funding.

Then there’s the issue of the Saudi Arabian sovereign wealth fund. From the NYT:

But three people familiar with the workings of the Saudi fund cast doubt on his account. They said the fund had taken none of the steps that such an ambitious transaction would entail, like preparing a term sheet or hiring a financial adviser to work on the deal.

And even if the fund were ready to move forward with such an agreement, it would invite review by the Committee on Foreign Investment in the United States, the government body that reviews the national-security implications of such transactions.

As concerns about his seriousness continued ramping up, Musk tweeted Monday night that he has taken on Silver Lake Partners and Goldman Sachs as financial advisers, with firms Wachtell, Lipton, Rosen & Katz and Munger, Tolles & Olson serving as legal advisers.

Now, it seems Tesla’s marching more to the SEC’s tune. Per a tweet by David Shepardson of Reuters, Tesla has filed an 8-K announcing its intent to form a special committee made up of three independent directors. The committee, which has not yet received a formal proposal from Musk, is tasked with reviewing the going-private proposal and advising board members on its feasibility.

[Image: Tesla]