Tesla just secured up to $500M in a credit line with big banks

June 12, 2015, 11:37 PM UTC
Telsa Motors Opens New "Supercharger" Station In Fremont, California
FREMONT, CA - AUGUST 16: A row of new Tesla Superchargers are seen outside of the Tesla Factory on August 16, 2013 in Fremont, California. Tesla Motors opened a new Supercharger station with four stalls for public use at their factory in Fremont, California. The Superchargers allow owners of the Tesla Model S to charge their vehicles in 20 to 30 minutes for free. There are now 18 charging stations in the U.S. with plans to open more in the near future. (Photo by Justin Sullivan/Getty Images)
Photograph by Justin Sullivan — Getty Images

Tesla has entered into an agreement to draw on credit of up to potentially $750 million from a group of banks, including Deutsche Bank, Bank of America, Goldman Sachs, JPMorgan Chase, Morgan Stanley, Wells Fargo, and Credit Suisse, according to a filing on Friday. The initial agreement is for $500 million in loans, but the filing says that if certain conditions are met, loans could be raised to up to $750 million.

The agreement, which is for both Tesla (TSLA) and its Dutch subsidiary (Tesla has an assembly plant in the Netherlands) is in the form of an asset-based, revolving credit facility. The loans — which are secured by their assets and can be borrowed and repaid as need be — are due in five years.

Tesla has a lot of spending it needs to do over the next five years. The company borrowed $2.3 billion in 2014 through a convertible bond offering.

The company plans to spend a whopping $1.5 billion in capex this year, which Tesla CEO Elon Musk called a “staggering amount of money,” in an earnings call earlier this year. Tesla not only has the Gigafactory that it plans to build, but also capital expenditures for the Model X and the Model 3, expansion into international countries like China, and rolling out more fast chargers.

Musk has said the $1.5 billion in capex spending could turn Tesla into a company worth $700 billion in a decade (around the valuation of Apple). But analysts and Wall Street were also concerned in May when the company showed that its cash supply is dwindling.

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