Tesla Has Just 4 Weeks to Rally 21% or Pay $920 Million on Bonds
The clock is now ticking for Elon Musk to avoid a $920 million bill for Tesla Inc.
That’s the amount of debt coming due March 1 from convertible bonds issued back in 2014. Tesla can dodge the payout by exchanging the note for a mix of cash and stock -- but only if the shares jump about 21 percent from their current level, based on a 20-day averaging period that starts today.
The debt payment, the largest in the company’s history, would take a big bite out of Tesla’s cash just as Musk enters another challenging year. But while a rally to the $359.87 price needed for a swap may be a long shot, it’s not an impossibility for a stock prone to heavy swings. And with the automaker scheduled to report fourth-quarter earnings Wednesday, a catalyst could be just around the corner.
“There’s always a glimmer of hope,” said Chris Hartman, a senior portfolio manager who specializes in convertible arbitrage at Aegon Asset Management. “With the volatility that can happen inside this stock, the market is clearly saying it’s possible for that stock to be at, near, or above $360.”
Read more: https://www.bloomberg.com/news/articles/2019-01-29/tesla-needs-21-rally-in-weeks-to-dodge-920-million-bond-payout
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