Tesla says it has ‘sufficient cash’ to pay for its biggest debt payment ever that’s due in a month

  • Tesla has $US920 million worth of convertible bonds coming due on March 1.
  • If the stock price is below the notes’ convert price of $US359.87 the company will be on the hook to pay the debt in cash.
  • In its fourth-quarter financial statement, the company said it is prepared to pay that sum – the largest in its history – in cash.

If Tesla’s stock price does not climb 17% in the next four weeks, it will be on the hook for $US920 million in cash.

That debt payment, the largest in the company’s history, will be triggered by convertible bonds with a strike price if $US359.87 due on March 1. In its fourth-quarter earnings release on Wednesday, Tesla signalled that it’s ready to pay for those notes in cash.

“We have sufficient cash on hand to comfortably settle in cash our convertible bond that will mature in March 2019,” the company said in its release.

That sentence contradicts a report from Bloomberg in December that said Tesla was planning to pay the debt with a mix of equity and cash.

In addition to the $US920 million coming due in March, Tesla has some $US1.3 billion and $US977 million of other convertible notes outstanding that will come due in 2021 and 2022. Another $US1.8 billion in traditional bonds due in 2025 is also outstanding, according to Bloomberg data.

“In the second half of 2018, our cash position improved by $US1.45 billion despite the scheduled repayment of a $US230 million convertible bond in Q4,” Tesla said in its statement.

Tesla had $US3.69 billion cash and cash equivalents on hand as of December 31, according to its newly released balance sheet.

Shares of Tesla sank about 1.74% following the earnings release.

Read More: