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Musk tells court he lacked ‘specific’ funding to take Tesla private | Elon Musk

Elon Musk expected strong financial backing when he tweeted he would take Tesla private in 2018, but lacked specific commitments from potential backers, according to testimony he gave on his third day of questioning in federal court in San Francisco.

Musk is accused of defrauding investors by driving up the price of Tesla stock by tweeting on August 7, 2018 that he had “secured financing” to take the electric car maker private.

The trial tests whether the world’s second-richest person can be held responsible for his use of Twitter. At stake are millions of dollars for shareholders who claim they have suffered losses after Musk tweeted that “investor support is confirmed” for the deal.

Tesla’s stock price rose after Musk’s tweets and later fell when it became clear that the acquisition would not happen.

Musk told the jury on Tuesday that he could have drawn on multiple sources of funding to take Tesla private, from existing shareholders such as Oracle Corp co-founder Larry Ellison to Saudi Arabia’s sovereign wealth fund or his own fortune.

“Funding was absolutely not an issue,” Musk said. “It was the exact opposite.”

However, Musk acknowledged that he had no binding agreements with investors and left it up to the jury to decide whether he misled shareholders.

A jury of nine will decide whether Tesla’s CEO artificially inflated the company’s stock price by touting the prospect of the acquisition.

In response to questions from his lawyer Alex Spiro, Musk said his tweet was intended to inform investors of his interest in taking Tesla private. Musk said he had already discussed his interest with the Tesla board and Saudi Arabia’s sovereign wealth fund, and he feared it would leak to the media.

“I had no bad motive,” he said. “My intention here was to do the right thing for shareholders.”

The Saudi fund did not immediately respond to a Reuters request for comment.

Musk told the jury he decided to drop the idea of ​​taking the company private after getting feedback from shareholders.

“After speaking with a number of investors, particularly the smaller investors, they said they would prefer a Tesla that remained public, and I felt it was important to be responsive to their wishes,” Musk testified.

The jury was shown notes and documents from a board meeting in the days after the tweet, in which Goldman Sachs, which worked with Musk on the proposed deal, had indicated there would be more than enough funding to take the company private.

Goldman Sachs did not immediately respond to a request for comment.

But when asked by Nicholas Porritt, a lawyer for the investors, Musk said he had no binding agreements for financing from any interested party.

Musk repeatedly resisted the “yes” or “no” answers Porritt had asked about discussions of funding commitments from the Saudi fund, prompting the judge at one point to assist in the questioning.

“Was a specific number discussed?” asked the judge.

“Not a specific number,” Musk said.

On Monday, Musk said he could have financed the deal by selling his stake in SpaceX, the aerospace company where he is also chief executive. He has also said he believed the funding had been promised by the Saudi fund before they backed out.

The tweet has already resulted in a $40 million settlement with securities regulators.

After it became clear the money wasn’t in place to take Tesla private, Musk stepped down as Tesla’s chairman while remaining CEO as part of the Securities and Exchange Commission settlement, admitting no wrongdoing.

The trial is scheduled to continue next week with testimony from Tesla board members and experts.

Reuters contributed to this report

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