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Tesla board moves to explore going private; shareholders sue over Elon Musk’s tweets

 (Associated Press)
(Associated Press)
By Jim Puzzanghera Los Angeles Times

WASHINGTON – Tesla Inc.’s board of directors said Tuesday it was forming a special committee to explore Chief Executive Elon Musk’s desire to take the Palo Alto electric-car maker private even as at least two shareholder lawsuits have been filed alleging he made false and misleading statements about the effort.

The committee of three independent directors “has not yet received a formal proposal from Mr. Musk” to take the public company private “nor has it reached any conclusion as to the advisability or feasibility of such a transaction,” Tesla said in a statement.

A final decision will require approval by the committee, which has full power to “evaluate and negotiate” a potential transaction, Tesla said.

The committee members are Brad Buss, a retired executive at SolarCity Corp. and several other tech firms; Robyn Denholm, chief operations officer at telecom firm Telstra Corp.; and Linda Johnson Rice, chief executive of Johnson Publishing Co.

Musk roiled Tesla and its stock last week by saying on Twitter that he was “considering taking Tesla private” and that he had “secured” the funding to do so at $420 a share.

The Aug. 7 tweet caused Tesla shares to jump 10 percent that day, but then they declined the rest of the week as questions arose about the likelihood of a deal and whether Musk had violated securities laws by making the public comments.

Tesla stock was down slightly in early trading Tuesday.

At least two class-action suits have been filed against Tesla on behalf of company shareholders alleging the company and Musk violated securities laws by making “false and misleading statements” about the going-private funding.

The Schall Law Firm in Los Angeles said Monday that it had filed one of the suits, noting reports that the Securities and Exchange Commission was looking into Musk’s statements.

“Both the SEC and Tesla’s board of directors are reportedly investigating Musk’s tweets on the matter,” the firm said in a news release. Because of that, Tesla’s “public statements were false and materially misleading” and “when the market learned the truth about Tesla, investors suffered damages.”

The other suit was filed Friday by Seattle-based law firm Hagens Berman Sobol Shapiro.

Musk said in a blog post Monday that his tweet last week about having “secured” funding to take Tesla private was based on meetings with Saudi Arabia’s sovereign fund that left him “with no question” that they could strike a deal.

No deal has been completed. Musk said he would present a more complete financing plan later.

“I continue to have discussions with the Saudi fund, and I also am having discussions with a number of other investors,” he said. “It is appropriate to complete those discussions before presenting a detailed proposal to an independent board committee.”

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