JPMorgan Chase & Co sued Tesla Inc seeking a US$162 million payment for warrants that expired above their strike price, which had been muddied by Elon Musk’s post on Twitter in 2018 threatening to take the company private.
JPMorgan claims that the Aug. 7, 2018, post on Twitter amounted to 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 before the announcement. Tesla abandoned its bid to go private on Aug. 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 at the contractual strike price and pay in full what it owes to JPMorgan,” the bank said in a complaint filed on Monday in a US federal court in NYC.
Photo: Reuters
“Tesla is in flagrant breach of its contractual obligations. As a result, more than US$162 million is immediately due and payable to JPMorgan by Tesla,” it added.
Tesla wrote JPMorgan on Feb. 13, 2019, saying that the adjustments made were “unreasonably swift and represented an opportunistic attempt to take advantage of changes in volatility in Tesla’s stock,” the bank said in the breach-of-contract complaint.
Tesla did not respond to a request for comment on the lawsuit.
Musk has sold US$930 million in shares to meet tax withholding obligations related to the exercise of stock options, US securities filings showed on Monday.
Separately, Musk sold 934,091 shares after exercising options to buy 2.1 million stocks at US$6.24 each on Monday.
He is required to pay income taxes on the difference between the exercise price and fair market value of the shares.
This is the second time in a week that the billionaire has exercised his stock option. On Monday last week, he sold another 934,000 shares for US$1.1 billion, after exercising options to acquire nearly 2.2 million shares.
The two sales were set up in September, the filings said.
Additional reporting by Reuters
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