Tesla jolts market with $2 billion stock offering, SEC subpoena

Separately, Tesla disclosed an SEC subpoena seeking information on some of its financing arrangements. Tesla Inc. surprised the market Thursday with the news that it was planning to offer about $2 billion of common stock in an underwritten deal, but an initial negative reaction gave way to hopes it’s the right step considering the recent runup for the stock and the Silicon Valley car maker’s expansion goals.

The company priced the offering early Friday at $767 a share, a discount to the stock’s closing price Thursday of $804. The deal raised a total of $2.03 billion.

Tesla stock TSLA, -2.55% initially fell Thursday, before recovering to trade nearly 5% higher.

Chief Executive Elon Musk will participate in the offering by purchasing up to $10 million in new shares, Tesla TSLA, -2.55% said in a statement. Board member Larry Ellison will also participate by buying up to $1 million in stock.

Proceeds of the deal will be used to bolster the company’s balance sheet and for general corporate purposes. Goldman Sachs and Morgan Stanley are underwriting the deal and have a 30-day option to acquire another $300 million in stock. eparately, Tesla released its audited 2019 annual report early Thursday, and disclosed that on Dec. 4, the Securities and Exchange Commission issued a subpoena seeking information concerning “certain financial data and contracts including Tesla’s regular financing arrangements.”

Tesla said the Department of Justice had also asked to voluntarily provide information regarding financing arrangements.

The company had two general counsels in 2019, and the most recent top lawyer, Jonathan Chang, left around Dec. 6. Also on Dec. 4, the electric car maker said the SEC closed its investigation into the projections and other public statements regarding Model 3 production rates. In the 2018 10-K filing, the SEC had issued subpoenas to Tesla in connection with Chief Executive Elon Musk’s statement regarding consideration of taking Tesla private and certain projections made for Model 3 production rates.

In the filing, Tesla said it expect capital expenditures to average between $2.5 billion and $3.5 billion a year in 2020 and 2021.