Tesla Increases Credit Line By $800 Million
Tesla CEO Elon Musk doesn’t hesitate to spend what it takes to bring the Tesla Model 3 to market.
Just about six months ago Tesla increased its credit line by $500 million with two new agreements. This came shortly after Elon Musk had taken to Twitter to say that additional funding may be unnecessary. Simply increasing the credit line doesn’t ultimately mean that the automaker needs the money, but Musk is definitely playing it safe. The company also raised funds three months ago through stock and debt offerings.
Now, the Silicon Valley automaker has expanded agreements further, to make space for another $800 million. Initially, the company has access at an asset-backed $625 million, but can then opt for an additional $175 million, if needed.
Friday’s regulatory filing shows that the total combined agreements bump Tesla’s credit line to a substantial $3.825 billion. At the close of the last quarter, the Palo Alto car maker had about $4 billion in available cash, but it was made clear that that number would likely be cut in half by the time Model 3 production starts.
Obviously, the automaker’s fast push through cash over the last two quarters, and the amount that will be flying out as Model 3 production nears, has caused a need to secure added credit options. According to the related SEC filing (via Electrek):
“On June 19, 2017, Tesla, Inc. (the “ Company ”) and its subsidiary Tesla Motors Netherlands B.V. (“ Tesla B.V. ” and together with the Company, collectively, the “ Borrowers ”), entered into the Sixth Amendment (the “ Credit Agreement Amendment ”) to the ABL Credit Agreement, dated as of June 10, 2015 (as amended, modified or supplemented, the “ Credit Agreement ”), among the Borrowers, the lenders party thereto, and Deutsche Bank AG New York Branch, as administrative agent and collateral agent, and the other agents party thereto. The Credit Agreement Amendment increased the revolving commitments under the Credit Agreement by $625 million, thereby increasing the total revolving commitments from $1.2 billion to $1.825 billion, and also amended the Credit Agreement to permit the Borrowers to obtain up to $175 million of additional incremental commitments for potential total revolving commitments of up to $2.0 billion, subject to the terms and conditions of the Credit Agreement.”