Musk may pay Tesla a $ 2 billion fine
We tell how it happened Tesla acquired SolarCity in 2016 when Musk was the largest shareholder in this company, and the business itself is heavily leveraged. Now he can pay a fine due to suspicion that he influenced the approval of the transaction.
Today, July 12, a two-week trial began on Tesla’s purchase of solar panel maker SolarCity. The plaintiffs – Tesla shareholders – believe The automaker’s board of directors pressured Musk to approve the deal, CNBC reported.
We are talking about the purchase in 2016; then, Tesla acquired SolarCity for $ 2.6 billion. At that time, Elon Musk was a board of directors and was the largest shareholder of this company, founded by his cousins Lyndon and Peter Rive. In the year of the purchase, SolarCity received a net loss of $ 820 million, and its debts at the time of the acquisition by Musk were $ 1.5 billion.
Plaintiffs believe that the deal with SolarCity at saving the company itself and deriving its benefits. However, Musk’s lawyers see the acquisition as an opportunity to fulfill the billionaire’s long-standing goal of creating a sustainable, vertically integrated energy company. The lawyers also said that SolarCity was solvent and could use other options for raising funds.
Musk responded in court that he “definitely had” no pressure on Tesla’s board of directors. The company’s head also denied accusations that he “vowed to take revenge on any director who would vote against the acquisition.” He added that he is not involved in the appointment and dismissal of board members and determining the size of their bonuses.
In August last year, Tesla’s top management entered into an amicable settlement with the plaintiffs, paying $ 60 million and pleading not guilty. After that, however, Elon Musk decided to go to court – according to him, it was a “share for shares” deal, and he had no financial gain.
Musk also called it “ludicrous” the idea that he could control Tesla shareholders. “I don’t think you can control big institutional investors like Fidelity and T. Rowe Price Investment,” he said.
If Musk loses, he will have to pay more than $ 2 billion – one of the most expensive court decisions ever handed down against a single CEO. Since the lawsuit by investors on behalf of the company, and not by individuals or funds, Tesla will receive compensation; that is, the billionaire will pay his own company.
According to Forbes, his fortune at $ 168.3 billion. Wedbush Securities analyst Daniel Ives believes that although this fine will not affect Musk’s financial position.
