Musk defends Tesla’s $ 2.6 billion deal for SolarCity, Energy News, ET EnergyWorld
Shortly after speaking, Musk denied that the deal was a SolarCity bailout, as Tesla shareholders claimed.
“As this was a share-to-share transaction and I owned almost the exact same percentage of both, there was no financial gain,” he said, answering his questions. lawyer.
Musk’s testimony kicks off a two-week trial in Wilmington, Delaware, before Vice-Chancellor Joseph Slights, which will decide whether the SolarCity deal was fair to Tesla shareholders.
The lawsuit by union pension funds and asset managers alleges the celebrity CEO heavily armed Tesla’s board to buy SolarCity, just when it was on the verge of running out of cash. Musk had a 22% stake in SolarCity, which was founded by his cousins.
At the time of the purchase, he also had an approximate 22% stake in Tesla.
Shareholders have asked the court to order Musk, one of the richest people in the world, to reimburse Tesla for what he spent on the transaction, which would be one of the most important judgments ever rendered against an individual. However, even if the judge finds the deal unfair, he could award much lower damages.
Musk, dressed in a dark suit, white shirt and dark tie, said that for years before the SolarCity deal, he saw the solar panel company as a natural part of the transition to the durable energy.
He presented the deal at the time as being at the heart of his “Master Plan, Part Deux”, which aims to reshape transportation by using sustainable energy to power fleets of autonomous electric vehicles.
Musk said on Monday that he did not control the appointment of board members or their compensation and that they had negotiated the SolarCity deal and its economic terms without his influence.
Asked by his attorney, Evan Chesler, to describe his relationship with the board, Musk said, “I would say so. They work hard and are knowledgeable. They provide good advice and act rigorously on behalf of shareholders. “
During cross-examination, shareholders’ attorney Randall Baron warned Musk that “we plan to spend a lot of time with you. This is going to be a chore.”
Musk grimaced, pointed at the six-inch-thick filing cabinet, and replied, “I can tell by the binder.”
Legal experts said the judge would be looking for evidence Musk threatened board members or that directors felt they couldn’t stand up to him.
The shareholder lawsuit accuses Musk of dominating deal talks, pushing Tesla to pay more for SolarCity and misleading shareholders about the solar panel maker’s deteriorating financial health.
At the heart of the matter will be the allegations that Musk, with his 22% stake in Tesla at the time of the transaction, was nonetheless a controlling shareholder. If it was, it would impose a stricter legal standard and increase the likelihood that the deal would be unfair to shareholders.
“It would be a surprise to most people if the court were to say that it is not in control here,” said Brian Quinn, professor at Boston College Law School. “Because he certainly acts the way he does.”
Tesla administrators settled allegations from the same lawsuit last year for $ 60 million, paid for by insurance, without admitting fault.
Slights will likely take months before he makes a decision. (Reporting by Tom Hals in Wilmington, Delaware; Editing by Noeleen Walder, Daniel Wallis and Andrea Ricci)