Even though JPMorgan’s adjustments were appropriate and required, Tesla has refused to settle the contractual exercise price.
JPMorgan Chase & Co. sued Tesla Inc. seeking a payment of $ 162 million for warrants that expired above their strike price, which had been clouded by Elon Musk’s 2018 tweet threatening to privatize the company.
JPMorgan claims that the August 7, 2018 tweet represented a major corporate transaction that allowed it to adjust the strike price, and the bank lowered it to maintain the same fair market value as before the announcement. Tesla abandoned the privatization deal on August 24 of that year, and JPMorgan again adjusted the strike price to reflect the increase in the share price.
“Even though JPMorgan’s adjustments were appropriate and contractually required, Tesla has refused to settle the contractual exercise price and pay JPMorgan in full,” the bank said in a lawsuit filed Monday at the Manhattan federal court. “Tesla is in flagrant breach of its contractual obligations. As a result, more than $ 162 million is due immediately and is payable to JPMorgan by Tesla. “
Tesla wrote to JPMorgan on February 13, 2019, complaining that the adjustments made were “ unreasonably quick and represented an opportunistic attempt to take advantage of changes in the volatility of Tesla shares, ” the bank said in the default complaint. contract.
Tesla did not respond to a request for comment on the lawsuit. JPMorgan said that as part of a series of collateral transactions in 2014, Tesla agreed to pay the bank in stocks or cash if, when the collaterals expired in June and July, Tesla’s share price was above the contracted price. If Tesla’s share price on the expiration date were less than the exercise price, JPMorgan would get nothing. The shares were “well above” their original, maturity-adjusted strike prices, the bank said.