Tesla Motors plans share sale to raise $214 million

DETROIT Wed May 25, 2011 6:58pm EDT

A Tesla Racer electric car drives to an acceleration test at the Challenge Bibendum sustainable mobility trade fair in Berlin May 18, 2011. REUTERS/Thomas Peter

A Tesla Racer electric car drives to an acceleration test at the Challenge Bibendum sustainable mobility trade fair in Berlin May 18, 2011.

Credit: Reuters/Thomas Peter

Related Topics

DETROIT (Reuters) - Electric car maker Tesla Motors Inc (TSLA.O) plans to raise up to $214 million through a share offering to help fund development of its Model X SUV, and said its chief executive would buy a portion of those shares.

The company's stock shot up 8.5 percent following the announcement, which was made in a regulatory filing on Wednesday.

The Model X is a crossover vehicle based on the platform of Tesla's Model S sedan, which is scheduled to begin customer deliveries in mid-2012.

A prototype of the Model X will be revealed by the end of 2011, with a commercial introduction set for the fourth quarter of 2013, Tesla said in the filing.

"Because the company is raising money to jumpstart a new product line, that's viewed as a long-term positive," analyst Andrea James of Minneapolis-based Dougherty & Co said.

Tesla said it planned to raise up to $158.5 million through a public offering of 6.095 million of its common shares, including 795,000 shares granted to the underwriter in a 30-day option, at $26 a share.

In a private placement at the same price, Tesla said it would sell 1.5 million shares to Chief Executive Elon Musk and 644,475 shares to Blackstar Investco LLC, an affiliate of Daimler AG (DAIGn.DE). At the offer price, the private placement would raise $55.8 million.

"That really shows confidence from the management team when you have the head of the company investing an incremental $40 million," said James, who has a "buy" rating on Tesla shares. "So that's encouraging."

Tesla sells battery packs and chargers to Daimler for its Smart fortwo and A-Class electric vehicles. It also has an agreement to make an electric powertrain system for Toyota Motor Corp's (7203.T) RAV4 EV, scheduled to go on sale in the U.S. market next year.

Daimler's Blackstar Investco affiliate had a 7.8 percent stake in Tesla at the end of 2010, according to Thomson Reuters data.

Goldman Sachs (GS.N) is acting as sole book-running manager for the public offering.

Tesla shares rose $2.26, or 8.5 percent, to close at $28.98 on the Nasdaq.

(Reporting by Mike Miller in Detroit and Nichola Groom in Los Angeles; additional reporting by Ben Klayman; Editing by Robert MacMillan, Dave Zimmerman, Gary Hill)

FILED UNDER: