On Monday, electric-vehicle maker Solarcity Corporation backed the acquisition in court, saying it had not acted improperly during the negotiation process with a Delaware judge.
The case dates back to 2016, when Mr. Musk was then chairman of two non-profit companies. His solution to improving their vision: Connect them About 1 2.1 billion bond Establish a clean energy business. Plaintiffs, who include several pension funds owned by Tesla, have classified the deal as a plan to benefit themselves and bail out a home solar company on the brink of bankruptcy.
Mr Musk was the first witness to be summoned to the Delaware Sanctuary Court for a fair trial, which is expected to last two weeks. Mr. Musk’s lawyers have designed this acquisition as an opportunity to realize his long-term goal of creating Vertically integrated static energy company.
A primary question in this case is whether Mr. who owned about 22% of Tesla at the time. Whether Musk controlled the transaction. Proving that claim is a challenge, because Mr. Musk was a minority shareholder in Tesla, and the company’s shareholders approved the acquisition. Mr. Solarity is worth more than what Musk’s lawyers paid for Tesla. Members of the electric vehicle manufacturer, including Muskin’s brother Kimball Musk, also claimed to have operated independently.
Other issues before the judge include whether the Tesla board members were privately owned by Solarcity shareholders or were conflicted by the investment funds they managed and whether key information about the deal was withheld from the shareholders. Mr. Musk said Monday that an independent director had negotiated and that Tesla’s directors had even canceled his plan to provide temporary funding to Tesla Solarcity.
Mr. Musk spoke in a calm and sometimes calm tone as he answered his lawyer’s questions. He gained more energy when he fielded questions from plaintiffs’ attorney, Randall Baron, as to whether he dominated Tesla, selected its board members, and made decisions without the involvement of directors.
Mr. Musk has created an extraordinary and a reputation Sometimes the chief executive of the war. He has previously revealed some of the case, creating evidence for a conflict in 2019, Mr. Baron was repeatedly distracted, calling him reprehensible for “attacking static energy.”
Mr. Mr. Baron on Monday. Muskin’s “power of will” and his vision of Tesla’s vision for the future sought to show how Solarcity could control the transaction.
Mr. Musk said he did not even enjoy being Tesla’s boss. “I hate it, I like to spend my time in design and engineering, and that’s what I inherently want to do,” he said.
Mr. Musk, to explain his behavior to the opposing adviser during the currency crisis, asked Mr. He told the court he did not respect Baron because the lawyer once worked for a law firm and became its partners. An ethic is mired in corruption. “I think you’re a bad man,” he said. Mr. Musk. Told Baron.
Mr Barron questioned why SolarCity’s performance differed significantly from plans offered to Tesla shareholders in 2016. Mr Musk blamed the solar-panel installation and declining market share on Tesla’s focus on developing its model. 3 cars in 2017 and 2018. Tesla was there at the time Struggling to bring the car to market.
“Those were the three hardest years of my whole life,” he said, adding that he later described the period as tragic. “The company was in serious crisis. Many times I thought we were out in the woods and we weren’t.”
Most recently, Mr. Musk said the corona virus infection affected Tesla’s ability to obtain permits for residential solar installations.
Mr. If Musk loses, he may be asked to complete Tesla. If the Chief Justice finds that the solar company is not worth anything when Tesla agrees to buy it, that fee will be equal to the value of the SolarCity transaction.
The investigation was delayed for more than a year due to infection. Mr. Musk is a separate board member prosecuted. During the SolarCity merger, other Tesla board members agreed to settle last year for a total of $ 60 million paid by insurance. Board members, some of whom were interested in both Tesla and Solarcity, denied any wrongdoing.
“I think Solarcity would have done better on its own and Tesla would have done better on its own, but in the long run, they’re together. That’s what the future holds,” Mr Musk said.
Mr. Musk brought the proposed deal to Tesla’s board in early 2016, court records show. Plaintiffs argue that Solarcity was in dire financial straits leading to the deal and was at risk of terminating the loan agreement without other fundraising options. They say the shareholders have not been fully informed about the status of the company.
Founded in 2006 by Mr Muskin’s relatives, Solarcity had a net loss of $ 769 million and $ 375 million in 2015 and 2014, respectively.
Mr. Musk’s lawyers say Solarcity is a solvent and could pursue other fundraising options.
Mr. When Musk testified, he could be asked how much he was involved in the deal with Solarcity, said Lawrence Hammermesh, managing director of the Law and Economics Institute at the University of Pennsylvania’s Gary Law School. “One of the things the plaintiffs want to show is whether he kept his fingers on the contract negotiations and the development and timing,” Mr. Hammermesh said before the hearing.
That information will help the court determine whether the Tesla CEO has restrained the company’s opinion on the merger, as well as testifying to certain directors’ conflicts of interest and whether they made their decisions independently.
Deputy Judge Joseph Slides III, Chief Justice Mr. If Musk finds that he did not abide by the agreement, the lawsuit against the plaintiffs will end. Hammermesh said. Lawsuits in Delaware generally adjourn the business judgment of independent and properly promoted directors. On the other hand, if the evidence indicates that it is regulated, the court will assess whether the contracting process and the price are reasonable, otherwise Mr. Mr Hammermesh asked whether Musk should be ordered to repay the money to Tesla.
“There will be theory that Tesla is damaged and Kasturi is the party in charge,” he said. “He has to complete Tesla.”
Mr. who is now among the richest on the planet. According to Musk, Seth Goldstein, analyst at Morningstar Research Services LLC, said the optics of loss would be more meaningful than any financial judgment ordered by the court.
“You can see the board is more proactive about Tesla’s current, non – existent acquisitions,” Mr Goldstein said.
Tesla investors have also experienced a change in luck since the acquisition first appeared. Automaker Released its first full-year profit in 2020. The stock traded for about $ 44 When Tesla proposed to buy Solarcity, Now trading at about 6,676.
Mr. Musk is no stranger to court appearances. In 2019, he was called to the position in a case by a British cave explorer Accused him of slandering him. Referee He is not guilty.
The previous year, the Securities and Exchange Commission had appointed Mr. He sued Musk and Tesla for misleading investors with his tweets. Mr. Musk and Tesla settled the case by paying $ 20 million each Mr. Musk agreed to reconsider some of his tweets By Tesla’s lawyers before releasing them.
Write Dave Michaels at [email protected] and Rebecca Elliott at [email protected]
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