NEW YORK, May 3 — Tesla Inc today was set to raise up to US$2.7 billion (RM11.2 billion) in a record-setting capital raising for the electric carmaker, as investors scooped up a mix of new stock and convertible notes that will recharge the company’s cash-depleted balance sheet.

The company said in a filing that it had increased its offer to 3.1 million shares, rising to 3.5 million including a tranche for underwriting banks, from an initially planned 2.7 million, priced at US$243 per share.

The filing also showed it would place convertible debt worth US$1.6 billion, up from an initial planned US$1.35 billion. That all pointed to buoyant interest in the offering and shares in the company rose 2.5 per cent in morning trading.

The coupon for the debt offering, however, was set at 2.0 per cent — the top of the indicated range — suggesting the company had ceded ground to investors to borrow so much.

The conversion premium at which the bonds can be exchanged for stock in the future, was also at the bottom of the initial range given by the company — another concession.

"Seeing the offering amount raised does not surprise me at all,” Clement Thibault, senior analyst at global financial markets platform Investing.com.

"As far as Tesla is concerned, the more money in the bank, the better.”

Tesla’s launch of a capital raise was greeted with relief by Wall Street yesterday after a tumultuous year which has seen analysts and investors cast doubt on its ability to produce, sell and deliver enough cars to make a sustainable profit.

The company faces expensive challenges, including launching production in China, overhauling its US retail and service operations and developing new models, including the high-volume Model Y SUV and a Semi commercial truck.

Many analysts had calculated that without new cash Tesla — which burned through US$1.5 billion in the first quarter and has seen demand for its cars soften — would not be able to carry out its plans.

The company said that after all costs had been deducted it could now get up to US$2.7 billion in new capital from the offer. That compared to the US$2.2 billion in cash reserves the company held at the end of March.

Buy in

Billionaire Musk, whose fortune centres around a 20 per cent stake in the US$42-billion company, also doubled his initial commitment for buying shares and will now buy stock worth up to US$25 million, the company said.

"The fact that Musk could increase its share from US$10 million to US$25 million is in line with the usual marketing scheme,” said Nord LB analyst Frank Schwope. "Musk always tries to surprise with promises that are often not kept.”

Including the option for underwriters to buy 15 per cent in each offering, Tesla will sell about US$860 million in new shares and $1.84 billion in debt.

Tesla had said yesterday it would raise up to US$2.3 billion in new capital through shares and debt. That included an offering of 2.7 billion shares worth around US$650 million and US$1.35 billion in debt, before issues to underwriters.

Tesla’s junk and convertible bonds opened roughly unchanged from yesterday’s close, with the bonds of its SolarCity unit higher, according to Refinitiv data. The US$1.8 billion junk bond maturing in 2025, which rose 1.8 per cent yesterday to a high of 87 cents on the dollar, was last at 86.5 cents. — Reuters