Elon Musk will be heading to court on the 12th of July, to defend Tesla’s acquisition of solar panel company SolarCity. If things go the wrong way, he could lose two billion dollars.
Tesla’s expansion in the Solar panel market, made the company acquire the vibrant solar panel company SolarCity for $2.6 billion in 2016 with a debt of $3 billion.
The acquisition deal was skeptical as Elon Musk was the largest shareholder of SolarCity before the purchase; Musk’s cousins Lyndon Rive and Peter Rive held managerial positions as CEO and CTO while Musk served as chairman.
SolarCity’s share price has been falling for the longest time; even Telsa’s stock price fell 10% after it announced the acquisition. SolarCity was financially unstable and had already been laying off workers.
Interestingly, five directors in Tesla had direct shares in SolarCity during the acquisition. Musk was able to convince Tesla’s board to go on with the acquisition citing the new technology “glass solar roofs”.
Read also,
-Tesla’s Model S Plaid Electric Car Launch, New Speeds Achieved
-Elon Musk Testifies In Court After Calling Vernon Unsworth A “Pedo Guy”
-Zoox And Tesla Settle Theft Of Confidential Documents Lawsuit Out Of Court
The company was expected to turn over positive cashflows in the months to come; which was preached by the investment bank in charge of the acquisition. Tesla’s purchase of SolarCity now looks like a bailout and not an acquisition if Elon Musk knew of its financial troubles.
Tesla shareholders filed a lawsuit in 2017 against Tesla/SolarCity/Musk asking for $2.6 billion in damages or the equivalent of the SolarCity acquisition. The suit mentioned that SolarCity “consistently failed to turn a profit, had mounting debt, and was burning through cash at an unsustainable rate.”
Due to the pandemic, the court trial has been adjourned indefinitely for some time now, earlier scheduled for March 16 this year; and then likewise moved to the 12th of this month.
According to a report by Reuters, shareholders insisted Musk “breached his fiduciary duties; squandered Tesla’s assets and also unjustly enriched himself by pushing to buy the money-losing solar company in which he was the biggest investor,”
Elon Musk will be the first witness of the case, and he will have to convince the court against Tesla shareholders lawsuit; else He loses the company or the cost of the acquisition.
For your daily dose of tech, lifestyle, and trending content, make sure to follow Plat4om on Twitter @Plat4omLive, on Instagram @Plat4om, on LinkedIn at Plat4om, and on Facebook at Plat4om. You can also email us at info@techtalkwithtdafrica.com and join our channel on Telegram at Plat4om. Finally, don’t forget to subscribe to our YouTube channel HERE.