Elon Musk Says He's Broke
The founder of Tesla Motors, the electric car company, said in a court filing connected with his divorce case that he ran out of cash late last year. According to the filing, and reported by VentureBeat, Musk has been living off personal loans from friends since October 2009 (he's spending $200,000 a month). Tesla itself is dealing with cash flow problems - the company has been drawing down on a $465-million loan from the Department of Energy. Tesla lost almost $30 million in the first quarter, not all that surprising since the company largely remains in its start-up phase. The obvious answer, for Musk as well as the company, is to go public (Musk owns a third of the business), but that could take time. Meanwhile, the company has agreed to pay $42 million to buy the NUMMI plant in Fremont (Toyota has promised to buy $50 million in stock once the IPO goes through). From VentureBeat:
His finances were not always so strained. In other documents filed in the divorce case, Musk reportedly made $9,551,753 in 2008 and an average of $17.2 million a year from 2005 to 2008. As of Dec. 31, 2008, he also had extensive holdings in venture capital and private equity partnerships, ranging from Softbank Technology Ventures to Charles River Ventures to Clarium Capital. These partnerships, however, tend to be highly illiquid investments: It can take months to get out of them because you have to find a sophisticated buyer willing to bear the risks of a private sale.
As he ran low on cash, a contentious divorce -- in which his ex-wife, Justine Musk, is seeking a sizable chunk of Musk's holdings -- caused him more financial problems. Justine Musk is asking a court to rip up a post-nuptial agreement she and Elon Musk signed in March 2000, which could in theory lead to much of his holdings being deemed community property. While there's no telling how the case will turn out -- it has already gone to appeal -- more important is the protective order the court has slapped on Musk's holdings in Tesla and his other illiquid assets. These include his stakes in private equity funds. He won't be able to sell significant holdings without first getting permission from his ex-wife. And he has also been ordered by a court to continue paying her legal fees for the duration of the lengthy appeal process.
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