Thread by @cppinvest

1/ There is an easy way for $TSLA to boost its annual free cash flow and, more importantly, net income: eliminate interest expense.

With its converts in the money and Tesla owning calls, it could just let the bonds mature in normal course and pay the converts off in equity.

2/ Obviously, the net inc impact would be muted by dilution from newly issued shares, but wiping $641mm per year in interest expense would, one would think, be easy for a company with a $275bn mkt cap. Issue shares, tender for the bonds at a negotiated make-whole premium, voila.

3/ For a company that needs non-recurring items to barely eke out a profit when it isn’t committing outright fraud, eliminating any expense is no small thing. (Okay, it’s ALWAYS committing outright fraud, but you get my point).

4/ These bonds are all non-call life. Equity is worth $970 trillion. Call the bondholders, cut a deal, issue stock, and eliminate $6.0 bil in liabilities. How is that hard? They’re going to issue stock to these guys anyway, why not get on with it? Interest clock is ticking.

5/ Or will they issue stock? They own calls deep in the money, so they exercise those for cash to help retire the bonds (if cash is chosen) and then issue stock to the warrant holders. Why don’t they use their prodigious cash balance to cut a deal now?

6/ Eliminating $640mm annually is not nothing. Maybe – and I’m just spitballing here – cash is tight? Maybe, as has been speculated forever, cash is fictitious?

7/ You’ve got $6.0 bil in liabilities that could be wiped out in nine seconds and you do nothing? Issue stock, get rid of everything, including the warrants. Cut a check, do the same, and then issue stock to yourself to replenish the cash.

How is this hard? I’ll tell you how this is hard.

This guy wants no new shareholders ever. He’ll waste – yes waste - $640mm annually to avoid issuing new shares to anyone. Tender for the bonds. Issue stock. Easy, peasy.