Tesla plans to raise $1.5 billion through a high-yield junk bond offering, with road shows expected to begin Monday. The fresh cash would help ramp up production of the recently released Model 3 sedan.
Tesla said last week it anticipates $2 billion in capital expenditures during the second half of the year to support production of the Model 3. Obviously, as an upstart carmaker, Tesla has needed to make a significant investments in infrastructure, but its current estimates for production and service expansion call for an unprecedented spend.
The company has $3 billion in cash, which CEO Elon Musk has said he would like to keep above $1 billion. Raising debt will help protect that cash position. The company has yet to make an annual profit.
Following Tesla’s announcement, Standard & Poor’s issued a “B-” rating for the bond issue, continuing a negative outlook for the company. S&P also maintained its “B-” long-term corporate credit rating on Tesla.
Tesla aims to scale production of about 100,000 cars per year to 500,000 by the end of next year.
Tesla said last week it anticipates $2 billion in capital expenditures during the second half of the year to support production of the Model 3. Obviously, as an upstart carmaker, Tesla has needed to make a significant investments in infrastructure, but its current estimates for production and service expansion call for an unprecedented spend.
The company has $3 billion in cash, which CEO Elon Musk has said he would like to keep above $1 billion. Raising debt will help protect that cash position. The company has yet to make an annual profit.
Following Tesla’s announcement, Standard & Poor’s issued a “B-” rating for the bond issue, continuing a negative outlook for the company. S&P also maintained its “B-” long-term corporate credit rating on Tesla.
Tesla aims to scale production of about 100,000 cars per year to 500,000 by the end of next year.
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