Tesla Puts Up Fremont Factory As Collateral

Tesla

MAY 10 2018 BY DOMENICK YONEY 54

The automaker’s asset is on the line.

The Tesla Fremont factory is now at risk of being seized by the bank. Or at least it will be one day if the company’s investment bets don’t pay off.  For now, it’s still cool, though. It’s just being offered as potential collateral to increase liquidity.

The change to Tesla’s credit agreement — the ninth amendment to the document known officially as the ABL Credit Agreement — with a syndicate of banks is noted in automaker’s 10-Q report, which was filed with the U.S. Securities and Exchange Commission (SEC) on the 7th of May. It says,

On May 3, 2018, the Company and its subsidiary Tesla Motors Netherlands B.V. entered into the Ninth Amendment (the “Ninth Amendment”) to the Credit Agreement. The Ninth Amendment amended the Credit Agreement to permit Tesla to include in its discretion: (i) the Fremont Factory facilities in the U.S. borrowing base and/or (ii) vehicles in and in-transit to Belgium in the Dutch borrowing base.

More factory fun – This April, Tesla Will Begin Major Expansion Efforts In Fremont

Aerial Footage Of Tesla’s Fremont Factory

Tesla currently has $543 million left on its $1.8 billion borrowing line. It’s unclear whether this action is meant to give banks confidence in the credit line or possibly expand it.

The move is seen by some, though, as a tacit admission that the company will need to raise more money in the near term to finance its continuing expansion. Analysts at CreditSights, for instance said in a note, “While not clear at this point, we suspect that with the large upcoming cash burn in 2Q18, the banks have demanded additional collateral protection for Tesla to maintain its $1.8 billion facility.” This, despite CEO Elon Musk’s insistence that not only is it not seeking to raise more cash, but it will be profitable in both the third and forth quarters of this year.

Reuters was told by someone they characterize as “a person familiar with the matter” the change was initiated by Tesla and hadn’t been made at the banks’ behest. This seems more in line with the actual language in the amendment.

With billions needed for a factory to produce the Model Y in the US, as well as a factory in China and other large anticipated outlays,it is entirely possible that this change may be more about 2019 financing arrangements, if we are to take Musk at his word about his 2018 targets and intentions. Hopefully for all parties involved, his predictive powers of future profit and capital expenditures are more accurate than his Model 3 build rate projections.

Source: Reuters

Categories: General

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54 Comments on "Tesla Puts Up Fremont Factory As Collateral"

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Elon’s word isn’t very good these days. Full self driving coast to coast hands free in 2017… 5000 Model 3/wk in 2017.

Yet another person confusing projected timelines with someone’s integrity.

Husband: Honey, I’ll try and be home by 8:00, arrives at 8:15.

Wife: Liar, you broke a promise, your word is no good!

Do you understand why what you said is a gross exaggeration?

Tesla lost hundreds of millions(the not produced cars). Not time is the problem, but money. The money lost, is missing in its company value and the pockets of investors, who did or still do believe Musks claims.
Its more like: if you borrow me 10000$, ill pay you your money back with a plus. Promised.
2 years later: yeah, here you get 8000$ back, thats it. Great work from us, production hell, sorry, hope you are happy.
Wrong information of company officials to push the company value are illegal. I hope some day, an investor will sue Musk. He really needs to stop publishing these wrong promises.

If you can’t tell the difference between a goal or a projection and a “promise”, then it’s best that you never invest in any company.

There are very safe investments, such as U.S. Treasury bonds. Of course, low risk means low yield. If you choose to make a riskier investment, then you need to understand that risk. From your comment here, you don’t.

However, those stockholders who chose to invest in Tesla during the first 2-1/2 years following the IPO, and have seen the stock value climb to something like 10x the price they paid, are rather unlikely to feel motivated to sue Tesla. 😉

That’s a nice excuse for Elon, but really, he never uses the word “goal”. His Tweets and statements are always phrased- “We will…”, or “will be…”. He never says- “Our goal is…”

Ever notice when you buy a lawn mower, the manual has silly warnings that only a complete moron needs to read? Like “Don’t put your fingers in the blade while the mower is running.” Whoever needs these warnings should NEVER be allowed to operate a lawn mower.

Corporate SEC statements have the exact same language for morons, called “Forward Looking Statement Disclaimers”. They are in every doc every company puts out, and they all say that every forward looking statement coming from the company are subject to risks. Then they list a long list of risks. Tesla does the same.

So when people don’t comprehend the concept of “Forward Looking Statements” being subject to risks, it always reminds me of the folks who need to be told not to put their fingers in the lawn mower blade. Some people should NEVER be allowed to own stocks.

Cry Babies should never be allowed to own stock or operate a lawnmowers. When they don’t know the difference between Company Stock & Live Stock.,

To be fair, I have a friend who lost a finger in a snow blower where it was off, but there was a spring with some tension left in it. Don’t put your fingers in the area where machines swing blades – use sticks or other tools. Lessons learned the hard way by others for us.

Gotta read those instruction pamphlets, ladies and gents.

Speak Engrish ?

Jopp — what is your complaint about 2 year returns on TSLA? Investors who bought $10K of TSLA shares on 05/10/2016 paid $207.55/share and got just over 48 shares. Those shares are now worth $14,700 dollars, providing a $4,700 dollar return. How are they going to sue on $4,700 in profits?

It is actually Ford investors who put up $10K, and only got back around $8K 2 years later. An investor in Ford would have gotten just under 750 F shares 2 years ago for $10K, and those shares are now worth $8,340 dollars, for a $1,660 loss.

So if you were really trying to talk about how F’ed F investors are, your numbers are somewhat correct over 2 years, but you are about $6700 dollars off when talking about TSLA investors.

In the same time period if you had BA or MSFT like I did, you would be far better off, and collected dividends to re-invest along the way. Future tip in the green car / energy space, BYD is a huge buy right now IMO. I put 100K in BYD last week, and also 25K in GM, which is my trading stock to pay for the family vacations…

Oh no don’t get mad at Elon Musk when tesla begins to make EVs and batteries in China. LOL CONNECT THE DOTS ON CLEAN AIR WAKE UP FOLKS

Tesla will be the last in China, they have lots of problems in the good ole USA, and no money to invest. I also hear their battery cell partner might be getting cold feet.

They’re partnered with Panasonic and just about the only US company looking forward at batteries being the biggest future need. A lot of companies will be buying from China if no others in the US hop on board.

Jopp just imagine President Tweet made those statements and everything will be ok. Do you feel better LOL CONNECT THE DOTS ON CLEAN AIR WAKE UP

The article says, “if we are to take Musk at his word about his 2018 targets and intentions”. I’m just saying his “word” or predictions if you’d prefer, haven’t been very accurate of late. I never said liar, nor is it a “gross exaggeration”.

Full self driving hasn’t shown up and likely won’t for quite a while. Its more like I’ll be home by 8:00 and we’re still waiting. Not sure they’ll ever come home.

“David” said:

“I never said liar…”

When you said “Elon’s word isn’t very good these days”, you quite clearly implied he’s a liar. That was the message you intended to convey, and nothing else. Now that you’ve been called on it, you’re pretending that’s not what you meant, altho your meaning was obvious.

Don’t pee on our legs and then try to tell us it’s raining.

Clearly when you said that I said he was a liar you meant that I was completely right in everything I say.

Wow. Talk about twisting words that weren’t there to suit your story.

Pu-Pu said:
“When [David] said ‘Elon’s word isn’t very good these days’, [David] quite clearly implied he’s a liar.”

🤦🏻‍♂️ No Pu-Pu. David did NOT imply that Elon is a liar. YOU quite clearly INFERRED, incorrectly, that David called Elon a liar. We can safely chock up your incorrect inference to you being a HUGE Tesla fanboy and shill.

Don’t crap 💩 on our feet and tell us it’s chocolate 🍫.

No, I meant imply, not merely infer.

The implication was inherent in what he wrote. I did not merely infer it; I did not mentally add in meaning that’s not present.

If you disagree, then tell me this: If he didn’t meant to convey to the reader the message “Musk is a liar”, then just what message did he mean to convey by saying “Elon’s word isn’t very good these days”? I’m pretty sure he wasn’t complaining about Elon’s grammar. 😉

If people are gonna post FUD, then at least they need to be honest enough to admit that’s what they’re doing.

And speaking of lying: You calling me a shill is rather hypocritical. I note that when I criticize Tesla, you serial Tesla bashers fail to express any surprise over someone you accuse of being a “shill” offering criticism.

I don’t know a lot of “shills” who criticize whoever is supposedly paying them to shill. Maybe things work differently in the Bizarro world of Tesla FUDsters?

Elon is a liar.
Remember his claim on Twitter early in 2017 of FSD being unleashed in “3 months maybe, 6 months definitely”? We are “definitely” 15+ months after his claim, and FSD still is nowhere on the horizon. In fact, he pushed it back to “thinking” it’ll be ready by the end of 2019. Or over 2 years after his “6 months definitely” claim he made in Jan of 2017.

The guy is a serial liar. Try and spin it all you want, but would you bet your life on a promise/goal/claim/wish/aim Elon makes coming to fruition exactly as he states? Who wants to bet me $1,000 that Tesla does not reach 6k/Model 3’s a week by the end of next month, like Elon claimed/wished/aimed/forecasts/thinks/whatever-you-want-to-call-it?

I don’t think they will be at 6000 per week until 4Q at the earliest.

I would stop short of saying Elon is a liar, which questions his integrity and attributes to him an intent to deceive. I don’t think he is trying to deceive. But clearly, his word(s) are not very good in this case and in many other well documented cases. I don’t see how anyone can defend Musk’s track record of his own words.

There is no question that David is correct. Elon’s word isn’t very good these days.

Elon has so little credibility, I would not put it past him to land exterior shells of Model 3s on the property to prove he met the targets when it could not be achieved. NDAs are a great way to silence people from speaking honestly about the situation.

Elon never claimed 6k a week. They are doing a burst rate test equivalent of 6k a week for a short period if time. This has been explained to you repeatedly

David, all you are doing is proving you are ignorant of the concepts of “Forward Looking Statement Disclaimers” and “Risk Factors” that are in every company’s SEC filings. Those disclaimers are implicit in forward-looking statements made by all corporate spokespersons at all times, and do not have to be repeated in their entirety (often pages in length) every time a spokesperson opens their mouth.

The written SEC docs serve as fair warning at all times to investors, with all investors having the affirmative duty to do their due diligence and read the public SEC disclosures before investing. If you are incapable of understanding your due diligence responsibilities, and the binding nature of SEC filings, do not ever invest in the stock market.

Why do you insist on proving your ignorance in public?

Nope you lied. If cant arrive on time then you are not honest

Will — It actually depends on what the contents are of the SEC filings that Husband INC filed quarterly and annually with the SEC.

If Husband INC failed to note in the SEC filings the list of Risk Factors involved with driving home, and failed to issue a “Forward Looking Statement Disclaimer” like every other company, then indeed investor “Wife” from Wife Investments would indeed have a claim.

But since Husband INC filed all the proper paperwork, Wife Investments was fully on notice that the Risk Factors that delayed Husband INC could indeed happen. And has zero recourse against Husband INC, as Wife Investments was fully aware of the risk long before the call was ever made.

This is how SEC filings work. I’m sorry you aren’t investment savvy enough to understand.

When banks ask you to upgrade the collateral on a loan that means they are getting cold feet. I think this may be the reason Musk has been acting so off recently, the pressure behind the scenes is building up.

It is also done prior to credit line increases

Tesla has repeatedly stated that they will be selling the leases they hold to produce cashflow, and that they will be using their lines of credit to fund ramp-up, and that they have no desire to do another round of stocks.

I prefer to only lease but as far as I know Tesla doesn’t offer any lease option for Model 3.

Correct. Tesla offers leases on Model S and Model X, but not Model 3.

Tesla doesn’t hold any leases that can produce cash flow to fund their operating and investing cash burn. They’ve already sold and/or borrowed against their leases.

So is Elon “Projecting” to be profitable in Q3 and not need additional cash or is he “Promising?”

Projecting CONNECT THE DOTS ON CLEAN AIR WAKE UP FOLKS

Nothing he says is a promise. Unless it comes true. Then it was a promise. If it fails to come true? It was a “projection/goal/aim/target/wishful thinking”.

He is saying he believes they will be profitable in Q3, and that he has no plans presently to do a cash raise. Promising is not really something you can do in business because stuff happens, and realities change.

You can look at Musk’s imperfect record and make your calculations from there. Sometimes he’s right, sometimes he’s right but timing is wrong, and sometimes he swings and misses completely.

“Promising is not really something you can do in business because stuff happens, and realities change.”

GM didn’t “promise” the first production Bolts would be delivered by the end of 2016, but they did “hint” at it. And low and behold, they delivered exactly as “hinted”! If GM actually promises something? Etch it in stone.
When Elon promises something? Etch it in an Etch-a-Sketch. 🙂

http://www.hybridcars.com/gm-president-hints-chevy-bolt-ev-deliveries-could-be-by-early-december-2016/

Bob Lutz you are correct when GM needed to be bailed out with government cheese they took the money LOL by the way how much money was it? CONNECT THE DOTS ON CLEAN AIR WAKE UP FOLKS

So did GM hit their announced Bolt and Volt delivery targets for 2017?

List their targets for Volt and Bolt and ACTUAL delivery numbers. Hint — it is a trick question…

Exactly… I can see from Musk’s (rather odd for a CEO) behavior that he is under tremendous pressure. Looking at the numbers profitability is going to be easier said then done. In Q3 2016 Tesla able to engineer a profitable qtr, by pulling ahead revenue, and deferring cost, but the company has grown now, and that engineered profit gets harder and harder to make happen. Tesla also has heavy accounts payable/revenue, meaning there really need massive revenue just to pay the bills. My guess is Tesla will not make a real profit in 2018

ALL forward looking statements made by ANY compny’s spokespersons are ALWAYS subject to the long laundry list of Risks detailed in the company’s SEC filings. They do not need to explicitly regurgitate pages of Risks every time they speak.

“…or is he ‘Promising’?”

Good luck finding anywhere, anytime, that Elon Musk has made any public statement in regards to Tesla that includes the words “I promise”.

Elon knows better than to give a promise on something where the outcome is uncertain. Of course, that fact — that reality — won’t stop anti-Tesla FUDsters from continually, and falsely, referring to what investors call “forward-looking statements” as “promises”… which isn’t merely a questionable opinion, it’s factually incorrect, as clearly spelled out in the disclaimer about forward-looking statements found in every quarterly and annual SEC filing from Tesla.

Of course, all of the short-selling Tesla bashers posting here know that perfectly well, since they are investors. They’re just playing dumb as part of their mendacious FUD campaign.

“Elon knows better than to give a promise on something where the outcome is uncertain.”

From the 2nd quarter earnings call, 8/2/17:

“So — but what people should absolutely have zero concern about, zero, is that Tesla will achieve a 10,000-unit production week by the end of next year.”

Nothing wrong with this move by Tesla. Gigafactory is valuable LOL CONNECT THE DOTS ON CLEAN AIR WAKE UP FOLKS

Another maneuver to fend off the inevitable fiscal doomsday Tesla is trying to stave off as long as possible as it continues to operate like a brand new startup a college dropout just launched. What established company in good fiscal standing would do such as thing as to offer its most valuable asset as collateral to creditors? Sounds more of desperation than anything else.

Bob Lutz is in the house LOL hey are your tesla shorts maturing? LOL CONNECT THE DOTS ON CLEAN AIR WAKE UP FOLKS

The plant is worth more to Tesla than anyone else as a capital asset.

That is a seriously true statement!
It wasn’t worth much when Tesla bought it, it would not be worth much if Tesla went under.
The whole process would just start over again.

After the bad investor call last week, this move does not send confidence to the market.
1) Elon IS NOT Steve Jobs. He is a very talented engineer and a great ideas guy; but he is a horrible speaker and the board at Tesla needs to realize this. Tesla needs a PR person in front of the public.
2) Stop introducing trucks, the model z, p or T. Just get your crap together with the model 3 ASAP and start producing the 5000 units a week already. That is the solution. CASH FLOW!!!!!!!

Musk is not an engineer. Never studied engineering, never really worked as one. He is a developer, manager and salesman and has quite some technical background knowledge from his studies and former work. But please do not call him engineer.

That’s just as wrong as claiming that Abraham Lincoln wasn’t a lawyer because he never attended law school.

Elon Musk is a self-taught rocket engineer, and one who by now has plenty of experience at engineering at SpaceX, not even counting his involvement with engineering at Tesla Inc.

I’d personally put Musk more as a visionary than an engineer. Having some engineering knowledge not withstanding. I don’t expect he is the guy primarily responsible for crunching the numbers. Honestly he’d probably do better to listen more to those guys.