New text messages and emails between Musk and those involved have been released amid a legal battle between shareholders and Elon Musk over his “funding secured” tweet.
The announcements pretty much confirmed how most people saw the situation: Elon Musk met with the head of Saudi Arabia’s Public Investment Fund (PIF) and held early talks on Tesla’s privatization, which he felt was sufficient to move forward say that “funding was secured”.
The whole “funding secured” situation is coming to light again because Musk is trying to buy Twitter to take it private, and the Tesla CEO is still locked in litigation over the situation. For those who don’t remember the situation, in 2018 Musk briefly considered trying to take Tesla private and let investors know through a simple tweet.
The Security and Exchange Commission (SEC) ruled that Musk exaggerated and misled shareholders when he said the funding was “secured” in the tweet:
I’m considering taking Tesla private for $420. financing secured.
— Elon Musk (@elonmusk) August 7, 2018
Musk campaigned against the SEC, berating them and claiming they work for people who are short-circuiting the electric carmaker. But ultimately, Tesla and Musk reached a settlement with the SEC.
As part of the settlement, Musk agreed to step down from the role of CEO, and Tesla and Musk each had to pay $20 million in fines.
The CEO probably didn’t want Tesla to foot the bill with the SEC. Although he could not pay Tesla’s part of the fine directly, he decided to buy $20 million worth of Tesla stock. In doing so, he indirectly paid for Tesla’s fine – although he also ended up receiving ~71,000 additional Tesla shares.
As we previously reported, Musk actually made money from the settlement as Tesla’s stock price rose sharply.
Another part of the settlement was that Musk and Tesla had to agree that the former would have its tweets reviewed by the latter’s legal team if they were material to the company.
Earlier this month, Musk brought up the whole situation in an interview with TED, insisting he hadn’t lied about the funding being secured and that he was forced to settle with the SEC to save Tesla.
However, the CEO never went into the details of this said funding. There have been rumors that the Public Investment Fund (PIF) of Saudi Arabia is interested in investing and privatizing Tesla.
The reasonable explanation most people have agreed on is that Musk met with PIF and they showed keen interest in taking Tesla private, and Musk took the meeting seriously enough to claim funding was secured .
The SEC apparently disagreed with the level of exposure.
Now, new text messages between Musk, Musk’s associates, and Yasir bin Othman Al-Rumayyan – the head of PIF – and his own associates show a behind-the-scenes look at this sensible explanation.
Here, Musk complains that PIF tells the media it hasn’t committed funds to take Tesla private, and PIF replies that they need to look at financial information and have a “kickoff conversation” with their team:
Musk was genuinely “upset” that PIF didn’t confirm his interpretation of their meeting:
In a text, Musk asked PIF to confirm they are in talks with Tesla and threatened “never to speak again” if they didn’t:
This is a big problem. It is extremely important that you confirm that you are speaking to me about the Take Private transaction. More needs to be said. If this is not said, we will never speak to each other again. Never.
When things fell through with Saudi Arabia, text messages even show that Musk approached Larry Page about investing in the deal. A recurring issue with Musk actually making a deal work seemed to be how he misjudged Tesla’s ability to hold smaller investors on a take-private deal.
Electrek’s take
It’s pretty clear from the newly released texts and testimonies that it’s as simple as Musk hitting PIF, they show a keen interest in helping him take Tesla private, but that’s all it’s come up with. They never went into detail, even according to Musk, and PIF appeared to be awaiting more information.
Almost everyone saw the situation that way.
The SEC, which apparently already had a problem with Musk sharing material information about a public company, Tesla, via Twitter, took offense and investigated. They determined that this was not enough to claim “funding secured”.
Musk obviously knows the difference, having taken a different route for the Twitter deal where he actually secured funding.
I personally don’t think it’s that big of a deal. He should have just tweeted that he was exploring the possibility of taking Tesla private and discussing funding with some parties, not that “funding is secured.”
I understand Musk was frustrated with how the deal with the SEC came about, but ultimately it was great for him. He paid for Tesla’s fine in shares, making hundreds of millions.
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