New text messages and emails between Musk and those involved have been published as part of a lawsuit between shareholders and Elon Musk over his “funding secured” tweet.
The messages largely confirmed how most people understood the situation: Elon Musk met with the head of Saudi Arabia’s Public Investment Fund (PIF) and had early discussions about taking Tesla private, which he took as enough to declare that “funding was secured.”
The “funding secured” situation is coming back to light since Musk is attempting to buy Twitter in order to take it private, and the Tesla CEO is still embroiled in lawsuits over the situation. For those who are unfamiliar with the situation, Musk briefly explored taking Tesla private in 2018 and informed investors with a simple tweet.
The Security and Exchange Commission (SEC) ruled that Musk exaggerated and misled shareholders when he said in the tweet that the funding was “secured”:
Musk launched a campaign against the SEC, calling them names and claiming that they were working for those who were shorting Tesla. However, Tesla and Musk eventually reached an agreement with the SEC.
Musk agreed to step down as chairman of the board as part of the settlement, and Tesla and Musk both had to pay $20 million in fines.
The CEO presumably didn’t want Tesla to have to pay for his issue with the SEC. While he couldn’t directly pay Tesla’s part of the fine, he decided to acquire $20 million in Tesla stock. That way, he sort of indirectly ended up paying for Tesla’s fine – though he also ended up with ~71,000 additional Tesla shares in the process.
As previously reported, Musk ended up profiting from the settlement due to Tesla’s stock price surge.
Another part of the agreement required Musk and Tesla to agree to have the former’s tweets examined by the latter’s legal department if they are important to the company.
Earlier this month, Musk addressed the situation in a TED interview, insisting that he did not lie about the cash being secured and that he was obliged to deal with the SEC to save Tesla.
However, the CEO never went into specifics about the money. The Saudi Public Investment Fund (PIF) was rumored to be interested in investing in and bringing Tesla private.
Most individuals agreed on a common-sense explanation: Musk met with PIF, who expressed great interest in taking Tesla private, and Musk took the meeting seriously enough to say that funding was secured.
The SEC clearly did not agree with the level of commitment.
New text exchanges between Musk, Musk’s associates, and Yasir bin Othman Al-Rumayyan — the head of PIF – and his own associates reveal the details behind that common-sense reasoning.
Musk complains that PIF told the public that it had not committed funding to take Tesla private, and PIF responds that they needed to examine financial facts and have a “kickoff call” with their team:
Musk was really “upset” that PIF wasn’t confirming his interpretation of their meeting:
In one text, Musk asked PIF to confirm that they were in discussions with Tesla and threatened to “never speak again” if they didn’t:
This is a major problem. It is extremely important that you confirm that you are in discussions with me regarding the take-private transaction. Noting more needs to be said. If this is not said, we will never speak again. Never.
When the contract with Saudi Arabia fell through, text exchanges reveal Musk reaching out to Larry Page to invest in the transaction. A recurring issue with Musk’s capacity to make any deal work appears to be his miscalculation of Tesla’s ability to retain smaller investors in a take-private arrangement.
According to the newly revealed texts and evidence, it’s as easy as Musk meeting PIF and them showing a strong interest in assisting him in taking Tesla private, but nothing more came of it. Even according to Musk’s statement, they never went into detail, and PIF appeared to be waiting for additional information.
This is pretty much how everyone saw the situation.
The SEC, which clearly had an issue with Musk releasing significant information about a public company, Tesla, via Twitter, took offense and investigated. They determined that this was not enough to claim “funding secured”.
Musk definitely understands the difference, as he went a different method for the Twitter purchase, in which he recently received money.
Personally, I don’t think it’s that big of a deal. He should have only tweeted that he is considering taking Tesla private and discussing funding with some parties, not that “funding is secured.”
I understand Musk’s dissatisfaction with how the arrangement with the SEC went down, it turned out great for him. He paid Tesla’s fine with stock and profited hundreds of millions out of it.