Elon Musk Explains "Funding Secured" Private Tesla Tweet With Saudi Talks

Elon Musk has clarified exactly what he meant when he tweeted he had "funding secured" to take Tesla private, after days of investors pushing the CEO to explain himself. Musk surprised many last week when he took to Twitter to suggest he would seek privatization for Tesla once the price reached $420 a share.

At the time, Musk's brief message indicated that not only did the outspoken Tesla founder have a price in mind, but that he had "funding secured" for the move. Explaining later, he argued that as a frequently shorted company, taking Tesla private would give it much more stability in its operations. It would also free the company from some of the short-term pressure to meet production goals and other challenges, which have in previous quarters proved all-consuming.

What Musk wouldn't be drawn on, until today, though, is just where that "secured" funding for the project had actually come from. Now, in a new post on Tesla's blog, he explains that the commitment was based on earlier discussions with the Saudi Arabian sovereign wealth fund.

"Going back almost two years, the Saudi Arabian sovereign wealth fund has approached me multiple times about taking Tesla private," Musk wrote. "They first met with me at the beginning of 2017 to express this interest because of the important need to diversify away from oil. They then held several additional meetings with me over the next year to reiterate this interest and to try to move forward with a going private transaction."

More recently, the chief exec says, the Saudi fund acquired almost 5-percent of Tesla's stock though the public markets. On July 31, he says, another meeting took place, where the Managing Director of the fund "strongly expressed his support for funding a going private transaction for Tesla at this time." That left Musk with the impression that there was "no question" that a deal could be finalized with the fund.

Musk's tweet proved more than a little controversial at the time. As well as stoking long-standing aggravations between Musk, Tesla fans, and the investors who frequently capitalize on negative news about the automaker to shift the share price, it also reportedly raised eyebrows at the SEC. That organization is responsible for ensuring securities laws have not been broken, in this specific case because of concerns Musk may have manipulated the share price, or not have been serious about the proposed deal.

According to Musk, talks are ongoing with both the Saudi fund and "a number of other investors," and he intends those discussions to be completed "before presenting a detailed proposal to an independent board committee." As for estimates that it could take more than $70 billion in order to take Tesla private, Musk says they "dramatically overstate" just how much capital would be required.

"The $420 buyout price would only be used for Tesla shareholders who do not remain with our company if it is private," he explains. "My best estimate right now is that approximately two-thirds of shares owned by all current investors would roll over into a private Tesla."

As for the timing of the tweet, Musk argues that "it was the right and fair thing" to notify all investors of his intentions, rather than just the few he was in discussions with. A final proposal isn't guaranteed, of course.