UPDATE: S&P Lowers Outlook on Tesla (TSLA) to CreditWatch Negative; Ratings Affirmed

August 1, 2016 3:26 PM EDT

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(Updated - August 1, 2016 3:39 PM EDT)

  • On July 31, 2016, Tesla Motors Inc. announced that it had reached an agreement with SolarCity Corp. to combine the two companies.
  • Upon the completion of the transaction (which Tesla anticipates will occur in the fourth quarter of 2016), SolarCity will become a wholly owned subsidiary of Tesla.
  • We are placing all of our unsolicited ratings on Tesla, including our 'B-' corporate credit rating, on CreditWatch with negative implications to reflect the significant risks related to the sustainability of the company's capital structure following the proposed transaction.
  • We will continue to monitor any developments related to the announced transaction and plan to resolve the CreditWatch placement when we receive final details about the company's pro forma capital structure and financial policy.

S&P Global Ratings said today that it has placed all of its unsolicited ratings on Tesla Motors Inc., including our 'B-' corporate credit rating, on CreditWatch with negative implications.

"The CreditWatch placement follows Tesla's announcement that it has agreed to merge with SolarCity in an all-stock transaction, which we expect will meaningful increase the combined entity's debt leverage," said S&P Global credit analyst Nishit Madlani.

We will monitor developments related to the announced transaction and plan to resolve the CreditWatch placement following our review of the sustainability of the company's capital structure in conjunction with its long-term business plan, financial policies, liquidity needs, and access to capital.



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