Tesla Motors, Silicon Valley's troubled electric carmaker, is still running on financial fumes, with $9 million or less in the bank. It's been widely misreported that the company has already raised $40 million. In fact, that's the amount it's hoping to raise, in the form of convertible debt, from current investors in a rights offering, which will take 30 days to complete. Musk made a fortune from PayPal, the online payments startup purchased by eBay, and other startups. He says he has enough money to take the entire round if other investors don't step up. And that may be exactly what he's hoping will happen.In a bankruptcy, holders of Tesla's debt will have priority over all holders of common and preferred stock in the company — including the Valley celebrities like Google cofounders Larry Page and Sergey Brin and eBay billionaire Jeff Skoll who have invested in Tesla. Raising this round of debt, followed by a bankruptcy filing, could be Musk's way of squeezing out other shareholders — especially cofounders Martin Eberhard and Marc Tarpenning. Employee with unexercised stock options will get wiped out in such a scenario. Current shareholders will have a right to invest in this debt round according to their current share — but Musk may well be counting on the short 30-day offering period and tight financial markets to shut out anyone who doesn't have the cash handy. Why do I think this is a likely scenario? Because Musk has done something similar before. When Musk briefly served as PayPal's CEO, he'd run the company's bank account to six weeks' worth of cash. PayPal insiders say Musk was pulling "financial machinations" to maintain his control of the company — but the board fired him instead and replaced him with cofounder Peter Thiel, who steered the company to its $1.5 billion purchase by eBay. Unfortunately for Tesla, there's no obvious white knight like Thiel on the horizon.
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