Tesla’s SolarCity bid denounced as ‘shameful’
Electric vehicle manufacturer, Tesla, has received criticism for its move to purchase SolarCity, a solar energy firm which has been on the ropes. Financer, Jim Chanos, described the decision as a ‘shameful example of corporate governance at its worst.'
The $2.8bn deal was announced by Tesla chief Elon Musk on Tuesday, during which it was described as a ‘no brainer’ but since then questions have been raised about the level of losses such a tie-up may incur.
Chanos said: “[SolarCity] is burning hundreds of millions in cash every quarter, a burden that now Tesla shareholders will have to bear, at a total cost of over $8bn.”
Musk himself has dismissed such concerns however, insisting that the deal would have no bearing on Tesla’s cash flow and would turn positive within six months.
Over the most recent quarter SolarCity posted a loss of $25m and has total liabilities of $6bn comprising a combination of debt and unpaid tax.