Tesla Motors Inc (NASDAQ:TSLA) latest filing with the Securities and Exchange Commission [SEC] shows the electric car maker can borrow up to $300 million for its vehicle leasing program through an agreement with German banking giant Deutsche Bank AG (NYSE:DB).
Tesla’s latest 8K filing with the SEC also showed that the new liquidity besides being part of a broader effort to strengthen the company’s finances, is also meant to show that the company’s own cash requirements for its direct leasing program would be “significantly reduced.” Tesla said the new agreement would prompt a reduction in both the amount of funds the company may raise from the public market, as well as the amount of dilution to Tesla’s existing stockholders from such fundraising activities.
Based on the loan and security agreement with DB, Tesla’s ability to draw the cash is scheduled to end on August 31, 2017, and the full amount outstanding from the loan is due on September 20, 2018.
Tesla, which has lost $1.2 billion in the past 24 months alone, faces a cash squeeze as it ramps up production plans for its $35K Model 3 next year and completes construction of its Gigafactory in Nevada. The company spent more than $117 million on its battery factory construction in the first half of 2016. Furthermore, Tesla has warned that the cost of building and operating the Gigafactory could exceed current expectations. Analysts are predicting $520 million in total losses from the electric car maker this fiscal year.
In August, Tesla, which has agreed to buy solar panel installer/cash sinking hole SolarCity Corp (NASDAQ.SCTY) for $2.6 billion, said it had $3.25 billion in liquidity available from its cash and cash equivalents as of June 30, 2016, including $1.7 billion from a public offering in May and a $678 million credit line. But in July the company repaid $678 million on a revolving credit line and planned to redeem $411 million of 2018 convertible notes, warning it could spend more on the securities.
“During the third quarter, we will be using substantial amounts of cash in connection with conversions of our 2018 Notes and we could pursue other actions to reduce our outstanding balance of convertible notes, which could require further outlays of cash,” Tesla wrote in the filing with the SEC.
Tesla Stock Reaction
In pre-market hours on Thursday, Tesla shares were down $2.15, or 1.07%, to $199.56. The name has declined 10.81% in the last 4 weeks and 14.36% in the past three months. Over the past 5 trading sessions the stock has lost 4.56%.
In the past 52 weeks, shares of Palo Alto, California.-based company have traded between a low of $141.05 and a high of $271.57, with the 50-day MA and 200-day MA located at $222.10 and $221.74 levels, respectively. Additionally, shares of Tesla, currently valued at $30.76 billion and a median Street price target of $242, trade at a P/E ratio of -6.73 and have a Relative Strength Index (RSI) and MACD indicator of 29.75 and -13.62, respectively.
Tesla Motors stock has underperformed over the last year, declining 19%, compared with a 12.6% gain in the S&P 500. The issue has plunged 16% since January 1.
TSLA is down nearly 27% from the 52-week-high of $271.57 it reached on Sep. 21, 2015.