JPMorgan Chase & Co. sued Tesla Inc. is seeking payment of $162 million for warrants that expired above their strike price, which was fueled by a tweet by Elon Musk in 2018 threatening to take the company private.
JPMorgan claims that the August 7, 2018 tweet was a significant corporate transaction that allowed it to adjust the strike price, and the bank reduced it to maintain the same fair market value as prior to the announcement. Tesla abandoned the go-private deal on August 24 of that year, and JPMorgan re-adjusted the strike price to reflect the increase in the share price.
The bank said in a complaint filed Monday in Manhattan federal court, “Although JPMorgan’s adjustments were reasonable and contractually required, Tesla has refused to settle on the contractual strike price and whatever it owed JPMorgan.” has refused to pay the same in full.” breach of its contractual obligations. As a result, over $162 million is immediately payable and is payable by Tesla to JPMorgan.”
The bank said in a breach of contract complaint, Tesla wrote to JPMorgan on February 13, 2019, complaining that the adjustment “was unreasonably sharp and represents an opportunistic attempt to take advantage of changes in volatility in Tesla’s stock.” “
Tesla did not respond to a request for comment on the lawsuit.
JPMorgan said that as part of a series of warrant transactions in 2014, Tesla agreed to pay the bank in stock or cash, when the warrants expired in June and July, with Tesla’s share price exceeding the contracted price. was up. If Tesla’s stock price at the expiration date was below the strike price, JPMorgan would get nothing. The bank said the shares were “well above” their original and adjusted strike prices at expiration.
The case is JPMorgan Chase Bank v Tesla Inc., 21-cv-09441, US District Court, Southern District of New York (Manhattan).
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