Tesla Is Just a Winning Stimulus as Fourth U.S. Automaker Emerges
NEW YORK (TheStreet) -- As Tesla Motors
Tesla could have been worth a lot more when it comes to the bottom line for taxpayers, even if the government's financial backing may have helped to create the nation's fourth automaker to supplant the Big Three of Ford
As Tesla repays $465 million in Department of Energy loans nine years ahead of schedule, the company is poised to extinguish highly profitable stock warrant contracts the government holds in the fast-rising automaker.
The government holds 3,090,111 Tesla warrants, some of which Tesla said has an exercise price of $7.54 and some that carry an exercise of price of $8.94 a share, according to the company's most recent annual report.
At Tesla's current share price of about $90, those warrants would be in the money by about $250 million, helping the government to recoup any losses in about $30 billion in financing it doled out in the wake of the financial crisis to commercialize the electric car and spur on investment in infrastructure.
Once the Energy Department loan is fully repaid ahead of schedule, however, Tesla will outline the extinguishment of the government's warrants in an 8-K filing with the Securities and Exchange Commission, Shanna Hendriks, a Tesla spokesperson, said in an e-mail.
"The warrants will expire," Hendriks wrote.
Tesla CEO Musk said in a "tweet " Monday that the company is in the process of repaying the loan after raising about $830 million in private capital through a stock and convertible bond offering.
Musk said the repayment will likely occur Wednesday. He is investing $100 million in Tesla's capital raise, according to a May 15 company statement.
When the warrants expire, only $12 million in interest payments made by Tesla will remain on the government's books for its near half-billion loan. Those loans, made under the DOE's Advanced Technology Vehicle Manufacturing Program (ATVM) were issued at about the government's long-term borrowing rate.
In total, Tesla will have provided the government marginal return for a significant outlay made in President Barack Obama's oft-criticized stimulus program.
In hindsight, Tesla was clearly worthy of the government's support, especially at a time when private capital for new business was extremely scarce.
While little evidence will remain of the government's backing of Tesla, the DOE loan, nonetheless, leaves behind the most exciting new U.S. automaker in over a generation, if not a century.
Ford and Nissan were even bigger recipients of DOE loans made under its ATVM program and a Ford executive told TheStreet in April the low-cost financing helped the automaker electrify its fleet and build new plant and equipment.