Tesla investors urge judge to order Musk to repay US$13b for SolarCity deal

19/1/2022 8:07:00 AM
Tesla investors urge judge to order Musk to repay US$13b for SolarCity deal

Tech: Tesla investors urge judge to order Musk to repay US$13b for SolarCity deal - Reuters

Tech: Tesla investors urge judge to order Musk to repay US$13b for SolarCity deal - Reuters

WILMINGTON, Delaware (Jan 19): Tesla Inc shareholders urged a judge on Tuesday (Jan 18) to find Elon Musk coerced the company's board into a 2016 deal for SolarCity and asked that the chief executive officer (CEO) be ordered to pay the electric vehicle company one of the largest judgements ever of US$13 billion (about RM54.5 billion).'This case has always been about whether the acquisition of SolarCity was a rescue from financial distress, a bailout, orchestrated by Elon Musk,' Randy

WILMINGTON, Delaware (Jan 19): Tesla Inc shareholders urged a judge on Tuesday (Jan 18) to find Elon Musk coerced the company's board into a 2016 deal for SolarCity and asked that the chief executive officer (CEO) be ordered to pay the electric vehicle company one of the largest judgements ever of US$13 billion (about RM54.5 billion).

"This case has always been about whether the acquisition of SolarCity was a rescue from financial distress, a bailout, orchestrated by Elon Musk," Randy Baron, an attorney for shareholders, told the Zoom hearing.The closing arguments recounted key findings from a 10-day trial in July when Musk spent two days on the stand defending the deal.

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A WILMINGTON, Delaware (Jan 19): Tesla Inc shareholders urged a judge on Tuesday (Jan 18) to find Elon Musk coerced the company's board into a 2016 deal for SolarCity and asked that the chief executive officer (CEO) be ordered to pay the electric vehicle company one of the largest judgements ever of US$13 billion (about RM54.Telegram channel for the latest updates.Telegram channel for the latest updates..

5 billion). "This case has always been about whether the acquisition of SolarCity was a rescue from financial distress, a bailout, orchestrated by Elon Musk," Randy Baron, an attorney for shareholders, told the Zoom hearing. “I obv can’t comment on every rumor, but this isn’t true. The closing arguments recounted key findings from a 10-day trial in July when Musk spent two days on the stand defending the deal. Am headed to Berlin mid Feb, not this week,” Musk tweeted in response to an article by website Drive Tesla CA which cited a tweet claiming he was visiting Berlin on January 16. The lawsuit by union pension funds and asset managers alleges that Musk strong-armed the Tesla board into approving the deal for the cash-strapped SolarCity in which Musk was the top shareholder. Musk added in a separate tweet that rumours around his travel plans online were becoming a “security issue,” in response to an apology from the account owner who first posted the wrong travel date, Sawyer Merritt. Musk has countered that the deal was part of a decade-old master plan to create a vertically integrated company that would transform energy generation and consumption with SolarCity's roof panels and Tesla's cars and batteries.

Evan Chesler, one of the lawyers representing Musk, told the hearing that the deal was not a bailout and SolarCity was far from insolvent and its finances resembled many high-growth tech companies. A first hearing in the court case will take place on February 11, although regional finance minister Joerg Steinbach told German newspaper Tagesspiegel earlier this month that the license to begin production could come before the case was resolved. A first hearing in the court case will take place on February 11, although regional finance minister Joerg Steinbach told German newspaper Tagesspiegel earlier this month that the license to begin production could come before the case was resolved. "They were building billions of dollars of long-term value," Chesler said of SolarCity. The all-stock deal was valued at US$2. — Reuters You May Also Like.6 billion in 2016, but since that time Tesla's stock has soared. Shareholder attorney Lee Rudy urged Vice Chancellor Joseph Slights of Delaware's Court of Chancery to order Musk return the Tesla stock he received, which would be worth around US$13 billion at its current price.

Musk said in court papers such an award would be at least five times the largest award ever in a comparable shareholder lawsuit and called it a"windfall" for plaintiffs. Rudy said Slights should consider Musk's contempt for the deposition and trial process, in which he repeatedly clashed with and insulted shareholder attorneys. "It would be a windfall for Elon Musk if he got to keep shares he never should have gotten in the first place," Rudy said. Chesler called the request to order Musk to return the stock from the deal"preposterous" and said it ignored five years of unprecedented success at Tesla. Tesla's stock was down 1% at around US$1,040 in afternoon trade on Tuesday.

Tesla acquired SolarCity as the electric vehicle maker was approaching the launch of its Model 3, a mass-market sedan that was critical to its strategy. Shareholders allege the deal was a needless distraction and burdened Tesla with SolarCity's financial woes and debt. Shareholders claim that despite owning only 22% of Tesla, Musk was a controlling shareholder due to his ties to board members and domineering style. If plaintiffs can prove this, it increases the likelihood that the court will conclude the deal was unfair to shareholders. Musk's lawyers said the celebrity entrepreneur had no power to fire directors or control their pay and he recused himself from price negotiations on the SolarCity deal.

"Without Elon Musk, Tesla might not exist, let alone have a US$1 trillion value," said Vanessa Lavely, an attorney for Musk."That doesn't make him a controller. That makes him a highly effective CEO." Slights ended the hearing by saying he expects to rule in about three months. He said last week he intends to retire in the coming months and a related shareholder lawsuit challenging Musk's record pay package was transferred from Slights to another judge.

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