Fisker, Tesla, and their DOE loans

[doug]

That DOE money has conditions and I'm pretty sure at least accounting-wise it paid for the plant since that's what it was for. Tesla cancelled building a plant and HQ in San Jose because the terms of the loan required Tesla re-purpose and existing facility. Then again Tesla got NUMMI for a song.

But money is money and it gets used one way or another. Why are we arguing what it got spent on?

 

[AnOutsider]

I think smoothoperator is trying to drive the point that without the DOE loans Tesla wouldn't have made it.

 

[smoothoperator]

That DOE money has conditions and I'm pretty sure at least accounting-wise it paid for the plant since that's what it was for. Tesla cancelled building a plant and HQ in San Jose because the terms of the loan required Tesla re-purpose and existing facility. Then again Tesla got NUMMI for a song.

But money is money and it gets used one way or another. Why are we arguing what it got spent on?

The discussion started out as a comment where Musk stated that he did not believe the DOE loan would have determined the ultimate fate of Tesla, (and that Diamler was more important to Tesla than the DOE loan) and that they would have been successful without the loan.

I did not agree with this statement (I think Musk had to say this so that he would not get a backlash) and pointed to some expenditures that Tesla made (largest ones being NUMMI and the tooling) that the DOE allowed Tesla to procure. Other people made claims that the IPO is what allowed this. It is obvious that Tesla IPO'd after the purchase of the factory. Just trying to clear up misconceptions with regards to the DOE loan, the IPO and where exactly Tesla was prior to the DOE loan. I do not think it is right for someone to claim that the IPO allowed them to purchase NUMMI when Tesla had not even IPO'd at that point.

 

[doug]

Certainly more money helps. I believe the thrust of Musk's argument was that the Daimler investment essentially saved Tesla from bankruptcy. They were in dire straits at the end of 2008. Would they still be in business today without the DOE loans? I'd say probably. There are a few small EV companies still kicking around (though their numbers are dwindling) and regardless Tesla has the most compelling technology of the lot. So the drivetrain business probably would keep the lights on until they got the Model S out the door, albeit at a much later date.

I think it's pretty clear to say that Tesla would not be as far as they are now without that DOE loan.

 

[ckessel]

From the US government regulatory filing.
http://www.sec.gov/Archives/edgar/data/1318605/000119312510139143/ds1a.htm

Transactions with Toyota Motor Corporation

In May 2010, we entered into a stock purchase agreement with Toyota Motor Corporation, or Toyota, pursuant to which Toyota will purchase $50.0 million of our common stock in a private placement to close immediately subsequent to the closing of our proposed initial public offering, at a price per share equal to the initial public offering price. As required under our DOE Loan Facility, we would set aside 50% of the net proceeds from this private placement to fund a separate, dedicated account.

In May 2010, we entered into an agreement to purchase an existing automobile production facility located in Fremont, California from New United Motor Manufacturing, Inc., or NUMMI, which is a joint venture between Toyota and Motors Liquidation Company, the owner of selected assets of General Motors. The purchase price for the land and the facility, excluding whatever manufacturing equipment we may subsequently acquire from NUMMI, is approximately $42 million.

Draw your own conclusions.

 

[smoothoperator]

Transactions with Toyota Motor Corporation

In May 2010, we entered into a stock purchase agreement with Toyota Motor Corporation, or Toyota, pursuant to which Toyota will purchase $50.0 million of our common stock in a private placement to close immediately subsequent to the closing of our proposed initial public offering, at a price per share equal to the initial public offering price. As required under our DOE Loan Facility, we would set aside 50% of the net proceeds from this private placement to fund a separate, dedicated account.

In May 2010, we entered into an agreement to purchase an existing automobile production facility located in Fremont, California from New United Motor Manufacturing, Inc., or NUMMI, which is a joint venture between Toyota and Motors Liquidation Company, the owner of selected assets of General Motors. The purchase price for the land and the facility, excluding whatever manufacturing equipment we may subsequently acquire from NUMMI, is approximately $42 million. .

Tesla Timeline

Tesla gets DOE loan June 2009

Tesla purchases NUMMI May 2010

Tesla goes public June 29, 2010

The bold underlined massive font event goes here....

 

[ckessel]

Tesla purchases NUMMI May 2010

May was the purchase agreement, the closing of that purchased occurred later. The regulatory filing says:

We anticipate that this purchase will close within a few months following the completion of this (IPO) offering.

The only source I can find for the actual taking of possession is 10/19/2010 from Wikipedia.

 

[smoothoperator]

May was the purchase agreement, the closing of that purchased occurred later. The regulatory filing says:

The only source I can find for the actual taking of possession is 10/19/2010 from Wikipedia.

Tesla posted a press release saying that they purchasd the factory on May 20,2010

Tesla Motors Announces Factory in Northern California | Press Releases | Tesla Motors

If there was a financing contingency, they would have never released it to the press.

Why would they have a press release saying they purchased it if it was just in escrow? Really curious to hear your reasoning for that one.

 

[ckessel]

If there was a financing contingency, they would have never released it to the press.

Why would they have a press release saying they purchased it if it was just in escrow? Really curious to hear your reasoning for that one.

Because it's in the legal SEC documents.
http://www.sec.gov/Archives/edgar/data/1318605/000119312510139143/ds1a.htm

As filed with the Securities and Exchange Commission on June 15, 2010
...
We also entered into an agreement to purchase an existing automobile production facility in Fremont, California from New United Motor Manufacturing, Inc., or NUMMI, which is a joint venture between Toyota and Motors Liquidation Company, the owner of selected assets of General Motors. The purchase totals 207 acres, or approximately 55% of the land at the site, and includes all of the manufacturing facilities located thereon. The purchase price for the land and the facility, excluding whatever manufacturing equipment we may subsequently acquire from NUMMI, is approximately $42 million. We anticipate that this purchase will close within a few months following the completion of this offering.

 

[ckessel]

The agreement also did have a contingency, again in that SEC filing:

In addition, our agreement to purchase our planned Model S manufacturing facility in Fremont, California provides that if we fail to close our acquisition of the facility by December 31, 2010, the agreement automatically terminates.

 

[smoothoperator]

Because it's in the legal SEC documents.
http://www.sec.gov/Archives/edgar/data/1318605/000119312510139143/ds1a.htm

In January 2010, we entered into a $465.0 million long-term loan under the United States Department of Energy’s Advanced Technology Vehicles Manufacturing Incentive Program which will be used to finance the development of our planned integrated manufacturing facility for the Model S as well as our electric powertrain production facility.

This is also in the prospectus....Why would Tesla claim to have purchased the factory with a press release when it was merely in escrow? Also there is a direct link here between the manufacturing facility being funded by DOE loans...There is still no direct link between Toyota purchasing $50 million in Tesla stock after the IPO and these Toyota IPO funds being used to purchase the factory.

 

[ckessel]

This is also in the prospectus....Why would Tesla claim to have purchased the factory with a press release when it was merely in escrow? Also there is a direct link here between the manufacturing facility being funded by DOE loans...There is still no direct link between Toyota purchasing $50 million in Tesla stock after the IPO and these Toyota IPO funds being used to purchase the factory.

I have no idea what you want to hear. Tesla filed the SEC document in June and stated they anticipated the purchase closing within a few months of the IPO. That's pretty cut and dried.

As for Tesla's press release, the general public doesn't really care about the distinction between a contract and its finalization date.

A relevant quote from More details emerge on Tesla-Toyota-NUMMI agreement - its far from a done deal

Posted May 29th 2010:
It simply means that there are some important details to work out before everything is finalized. Tesla's vice president of communications, Ricardo Reyes, put it best when he told Green Car Advisor, "That's how you do a deal like this. You agree to do do it, then you work out the details."

 

[smoothoperator]

I have no idea what you want to hear. Tesla filed the SEC document in June and stated they anticipated the purchase closing within a few months of the IPO. That's pretty cut and dried.

As for Tesla's press release, the general public doesn't really care about the distinction between a contract and it's finalization date.

What about the direct link between the IPO and it funding the factory? Could not find that in the prospectus

I have never heard of a company claiming something in a press release that was not factual. Very odd.

 

[ckessel]

What about the direct link between the IPO and it funding the factory? Could not find that in the prospectus

The only "link" is the SEC statement that Tesla expected to pay Toyota out of the proceeds of it's IPO, an IPO in which Toyota was giving Tesla 50 million.

The deals weren't hinged though. A couple articles indicated the deals were tied together, but the SEC filing doesn't appear to support that. If the IPO failed, Tesla could have presumably used other money rather than the IPO proceeds, such as the DOE loan. Those as we've all noted before, once money all goes into the overall pot it's difficult to say it really came from any particular bucket.

 

[davidrmay]

What about the direct link between the IPO and it funding the factory? Could not find that in the prospectus

I have never heard of a company claiming something in a press release that was not factual. Very odd.

well PR is PR and buying and paying are 2 different things. You buy the house and pay (close later) I still tell my friends I bought the house the day the counterparty signs the docs. In the same way they stated they got the DOE loan in June 2009. That was actually just the loan approval. No money. The first draw on the DOE loan was $29.9M by March 31, 2010. You can review the complete draw schedule http://ir.teslamotors.com/secfiling.cfm?filingID=1193125-12-225825&CIK=1318605

You could even imply Toyota saving face "selling plant for $42MM" and then post-IPO investing $50MM. You could read this as Tesla getting the plant and $8MM. While at the same time financing a lot of the "inside of the factory" equipment which cost millions with the DOE loan.

I'm with ckessel, in the end which $$$ for what is really just guesses.

 

[brianman]

I'm with ckessel, in the end which $$$ for what is really just guesses.

The word "fungible" comes to mind.