JP Morgan is Suing Tesla for 162 million dollars and the only way the car maker can win is if they prove that their CEO can’t be taken too seriously.In 2017 Tesla raised money from a range of banks by offering convertible bonds.
Convertible bonds can be converted to stock in a company in a case where the company fails to make repayments so they are safer for banks than traditional bonds and as such attract a lower interest rate.
JP Morgan further secured their position by entering into options contracts which gave them the right but not the obligation to sell shares at a fixed price. This meant if Tesla went bankrupt they could still get their money back.
The banks only risk now was the cost of the options contracts they were buying, a risk that hurt them greatly when Elon made his now infamous tweet about taking tesla private.
This cost the bank a reported 162 million dollars in additional premiums. Tesla’s defence has so far amounted to “it was just a prank bro”.
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