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(Addition of Tesla's statement, paragraphs 4 and 11)
September 23 (Reuters) – Tesla Inc. Chief Executive Officer Elon Musk has urged investors to approve the acquisition of SolarCity in 2016 at a price well above its market value, knowing that the installer Solar was facing a lack of cash and had publicly stated that it had objected to its participation in the transaction. , according to unsealed court documents Monday.
The filing was part of a lawsuit filed by Tesla shareholders, alleging that the company's board had breached its obligations to investors by approving the company's $ 2.6 billion acquisition of the troubled company, which was managed by the first cousins of Musk and of which he was the president and the main shareholder. Former SolarCity operations have weighed on Tesla as panel installations have collapsed since their acquisition.
The defendants asked the Chancery Court Judge of Delaware to file the case before his trial in March. Shareholder lawsuits that survive a request for revocation often result in pre-trial proceedings, which in this case may involve a payment to shareholders by Musk as well as money from directors' insurance.
Tesla dismissed the charges in a statement sent by email, claiming that they were "based on the assertions of the plaintiff's attorneys looking for a payday, and do not represent our shareholders who support our mission and finally voted in favor of the acquisition ".
The lawsuit represents another legal headache for Musk, the high-ranking entrepreneur who filed a lawsuit by US securities regulators last year for using Twitter and being sued for defamation by a British diver who said that Musk had falsely termed a pedophile. Just last week, a Delaware judge ruled that Tesla should defend the multi-billion dollar Musk pay package at trial.
According to the filing, Musk was informed at a SolarCity council meeting in October 2015 that SolarCity needed to raise up to $ 300 million and reduce its solar plant forecasts for the first time. year. The company issued $ 113 million in convertible notes a month later, of which Musk bought $ 10 million.
In February 2016, SolarCity management told the board of directors that its cash balances should fall below the amounts required for a key line of credit for several months of the year. A default on this line of credit would lead to defaults on other debt instruments, the file said.
Despite the bad news, Musk proposed to Tesla's board to acquire SolarCity later this month after a family vacation on Lake Tahoe with his cousin, SolarCity's managing director and founder, Lyndon Rive. SolarCity has not disclosed the details of its liquidity concerns to investors.
At a Tesla board meeting on June 20, 2016, Musk recommended to the other members of the board of directors an initial purchase price of $ 28.50 per share for SolarCity, or 30% more than its market price, while Tesla's financial advisor, Evercore, had recommended $ 27 per share.
The board finally approved an exchange ratio representing a share price of $ 26.50 to $ 28.50 per share, although the offer was reduced later before the closing of the transaction.
Tesla stated that Musk's meetings with Rive, his involvement in the valuation discussions and all other important information had been accurately described to shareholders in public documents prior to the completion of the transaction.
Once Tesla bid for SolarCity on June 21, Musk publicly withdrew from the deal. But, according to reports, he has often met Evercore and has pushed investors into a series of phone calls to support the purchase.
"I could not be recused from all the discussions (…), I obviously had to express my opinion," Musk said during a sworn interview of attorneys on behalf of shareholders.
At the same time, Musk assured Rive that it would "cover" its liquidity needs until the closing of the acquisition, as SolarCity "creaked" for its liquidity commitments, have indicated the documents.
The companies indicated that SolarCity had accepted the offer on August 1, 2016. The stock exchange offer valued SolarCity at $ 25.37 per share, less than the initial proposal and according to the Evercore proposal. Shareholders approved the deal on November 17th. (Report by Nichola Groom, edited by Tom Brown)
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