Long term critic and short seller of both TSLA and SCTY, Jim Chanos, called the TSLA-SCTY a ‘brazen bailout’, citing the 20% yielding SCTY bonds as evidence that the company was barreling towards financial distress.
Moreover, he said the price action in both SCTY and TSLA’s shares today indicated that TSLA shareholders believe the par value for SCTY was, essentially and inexorably, zero.
If you enjoy the content at iBankCoin, please follow us on TwitterShortseller Jim Chanos of Kynikos Associates blasted Tesla Motors Inc’s proposed acquisition of SolarCity Corp, describing it as a “brazen” bailout and “shameful example of corporate governance at its worst.”
“SolarCity, whose bonds were yielding 20 percent yesterday, is a company headed toward financial distress,” Chanos said in an emailed statement on Wednesday. “It is burning hundreds of millions in cash every quarter, a burden that now Tesla shareholders will have to bear, at a total cost of over $8 billion.”
Chanos, whose firm has been betting against Tesla and SolarCity shares, said the combined drop in the market value of the two companies was more than the equity value of the deal itself, “which means that Tesla shareholders think SolarCity shares are essentially worthless.
“Finally,” he added, “it is hard for me to believe that this deal was not being contemplated when Tesla, and Mr. Musk himself, sold shares just a few weeks ago.”
off topic here but this is just as shameful .. WTF!
http://www.bbc.com/news/world-australia-36547683
barbarians
Chanos should cover before TSLA/SCTY blasts off to Musk’s predicted market cap of 1 trillion make-believe Musk $$$’s or precisely $6,854.65