8-KMaterial AgreementsFinancial Events

Tesla, Inc. 8-K Report, Material Agreement (Jan 4, 2019)

Filed January 4, 2019For Securities:TSLA

Summary

Tesla, Inc. (TSLA) filed an 8-K on January 3, 2019, to report on material definitive agreements related to its vehicle leasing program. The company announced the termination of a 2017 warehouse credit facility following full repayment via a securitization of underlying leased vehicle assets. Concurrently, a new credit facility, the 2018 Warehouse Agreement, was established with substantially similar terms to replace the terminated one. This refinancing maintains Tesla's total lender commitment at $1.1 billion across its outstanding warehouse credit facilities. The new facility is secured by lease contracts and vehicles, with a loan interest rate generally based on LIBOR plus a fixed margin (approximately 3.9% at the time of filing). The facility has a draw period ending in August 2019 and a maturity date in September 2020, subject to certain conditions. This action is part of Tesla's strategy to support its direct vehicle leasing program without direct guarantee from the parent company.

Key Highlights

  • 1Tesla's subsidiaries established a new $1.1 billion warehouse credit facility to support its direct vehicle leasing program, replacing a prior facility.
  • 2The previous 2017 warehouse credit facility was terminated and fully repaid through a securitization of leased vehicle assets.
  • 3The new 2018 Warehouse Agreement has substantially the same terms as the terminated 2017 agreement.
  • 4The total lender commitment across outstanding warehouse credit facilities remains unchanged at $1.1 billion.
  • 5Obligations under the new facility are secured by lease contracts and leased vehicles.
  • 6The interest rate for the new facility is generally based on LIBOR plus a fixed margin, approximately 3.9% at filing.
  • 7The new facility has a draw period ending August 16, 2019, and a maturity date in September 2020.

Frequently Asked Questions

These warehouse credit facilities are established by Tesla's subsidiaries to support Tesla's direct vehicle leasing program. They provide financing for leased vehicle assets without Tesla, Inc. acting as a guarantor.

No, the total lender commitment across the outstanding warehouse credit facilities remains the same at $1.1 billion. This transaction involved the termination of one facility and the establishment of a new one with the same aggregate commitment.

The new agreement has similar terms to the previous one, with obligations secured by lease contracts and leased vehicles. The interest rate is generally LIBOR plus a fixed margin (around 3.9% as of the filing). The ability to draw funds ends on August 16, 2019, and the maturity date is in September 2020.

According to the filing, Tesla's subsidiaries establish these facilities, and Tesla, Inc. is not a guarantor or otherwise a party to these agreements. The obligations are secured by the underlying leased vehicle assets.