Skip to content
Subscriber Only

Tesla Could Win Big Even If Elon Musk's New Plan Flops

  • Tesla stock rallies above some convertible debt strike prices
  • Holders would be likely to convert instead of get cash back
Video player cover image
RBC Capital Markets analyst Joseph Spak discusses possible funding options for a leveraged buyout of Tesla.(Source: Bloomberg)
Updated on

Investors in an arcane corner of the bond market are latching onto one important detail lost amid all the chaos surrounding Elon Musk’s bombshell Tuesday: Even if he ultimately fails in his effort to take Tesla Inc. private, the company could win much-needed debt relief.

That’s because more than a third of the company’s approximately $11.5 billion debt was issued as convertible bonds -- securities that creditors can exchange for equity if the stock reaches a certain price level. Coaxing investors to take equity, instead of demanding repayment on the money they’re owed, would help ease the financial pressure on a company that’s burned through more than $600 million in six of the past seven quarters.