Tesla settles $ 920 million convertible bond in cash

(Reuters) – Tesla Inc. has repaid a cash bond worth $ 920 million, a group spokesman said Friday.

The bond, which matured on Friday, had a conversion price of $ 359.87, but shares of the electric car maker dropped 8% to $ 294.79, forcing the company to settle its largest payment in cash from his debt.

Convertible issues give bondholders the right to negotiate their debt for shares after the shares have exceeded a certain price, allowing them to benefit from a rising share price while providing similar protection to a bond in the event of a fall.

Friday's payment will significantly reduce the $ 3.7 billion in cash that Tesla had on hand by the end of 2018.

Although the automaker's activity is cash-intensive and has always struggled to maintain a positive cash flow, Musk said earlier that he would not use stock markets in a near future.

Wall Street analysts, however, have predicted that Tesla may need to add $ 9.4 billion to its debt pile if its liquidity needs remain high.

Tesla offered for the first time a $ 35,000 version of its Model 3 sedan and announced that its global sales would now be online only.