Everyone seemed to lose their mind when Tesla CEO Elon Musk tweeted out Tuesday that he was considering taking the company private. For a time, the NASDAQ had to halt trading of Tesla stock because of massive fluctuations in the share price. The reasoning behind this move made sense as it would allow the company to focus on the long-term. But this tweet has also brought some unattended problems.
Reuters has learned from sources at Tesla that the board of directors is seeking more information from him as to how the buyout will be financed. As we reported yesterday, the board has talked about this idea for some time. But a source reveals that it hasn't gotten either a detailed plan from Musk, nor any information as to who will provide the funding.
Both Reuters and CNBC are reporting that the board will make a decision on whether or not to do a formal review of Musk's proposal in the coming days. It also plans to speak with financial advisers about explore this proposal.
Sources tell CNBC that the board will ask Musk to recuse himself from the review process of his proposal. He'll need to hire his own advisers for a review.
There is another twist in this story. Musk has talked to Saudi Arabia's sovereign wealth fund about a take-private deal, according to a source. This is likely due to the Saudi's Public Investment Fund buying between a 3 to 5 percent stake in the automaker, worth about $2 billion that was brought to light this week.
Tesla's board isn't the only group interested in Musk's plan. Last night, the Wall Street Journal reported that the Securities and Exchange Commission (SEC) is inquiring whether or not Musk was telling the truth when said that he had secured funding for the buyout. Under U.S. law, companies and officials cannot give misleading information about events to shareholders.
It is unclear whether or not this will cause an investigation be opened or not. A SEC spokesman declined to comment.
Musk could also be in trouble if the SEC find evidence that his tweet was aimed at increasing the company's share price.
We'll keep you posted if anything new breaks.