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Tesla Announces $1.6B Convertible Debt Offering

NEW YORK (TheStreet) -- Tesla Motors (TSLA - Get Report) has filed a release to issue $1.6 billion worth of convertible debt, as it looks to shore up its cash position in anticipation of the upcoming gigafactory, and for the development of its Gen III vehicle.

The company noted that of the total offering, "Tesla will offer $800 million aggregate principal amount of convertible senior notes due 2019 and $800 million aggregate principal amount of convertible senior notes due 2021."

Goldman Sachs (GS), Morgan Stanley (MS), JP Morgan (JPM) and Deutsche Bank are acting as the joint book-runners on the deal. Tesla noted the underwriters will have a 30-day option to buy an additional $120 million in convertible debt due 2019 and $120 due in 2021, making the total potential size of the offering $1.84 billion.

The convertible senior notes due 2019 will be convertible into cash, and Tesla shares, which hit a new 52-week high of $265 per share earlier today. The convertible senior notes due 2021 are convertible into cash, and if applicable, Tesla's common stock as well.

Tesla said it intends to enter into hedge transactions for the convertible notes, as well as warrant transactions, which are designed to prevent dilution of the common stock "at the time of pricing of the notes due 2019 and 120% over the common stock price at the time of pricing of the notes due 2021."

-- Written by Chris Ciaccia in New York

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