JP Morgan Chase & Co. sues Tesla for $ 162.2 million, accusing electric car company Elon Musk of “gross” breach of a stock warrants deal after price increase of its share.
According to the complaint filed in the federal court of Manhattan, Tesla in 2014 sold warrants to JP Morgan, which they would pay if the exercise prices were lower than the share price of Tesla at the end of the rights, in June and July 2021.
JP Morgan, which said it had the power to adjust the exercise price, said it had significantly reduced the price since Musk tweeted on August 7, that it could list the company at $ 420 a share and that it had secured funding, while reversing some of the decline when Musk abandoned the idea 17 days later.
But Tesla’s price has risen almost 10 times since the day the warrants expired, and JP Morgan said that under the contract, Tesla was required to give up its shares or cash. He added that Tesla’s failure to do so amounted to a moratorium on payments.
“Although JP Morgan’s adjustments were appropriate and required under the contract, Tesla grossly disregarded its clear contractual obligation to pay JP Morgan in full,” the complaint said.
According to the complaint, Tesla sold the warrants to reduce the possibility of dilution of the stock from a separate sale of convertible bonds and to reduce income taxes.
In February 2019, the automaker complained that the bank’s adjustments were an “opportunistic attempt to take advantage of changes in Tesla stock volatility,” but did not dispute the underlying estimates, JP Morgan said.
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Source From: Capital
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