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Jim Chanos Thinks Tesla-SolarCity Deal Is 'Shameful'

Jim Chanos Thinks Tesla-SolarCity Deal Is 'Shameful'

Jim Chanos is not a fan of SolarCity Corp (NASDAQ: SCTY) and Tesla Motors Inc (NASDAQ: TSLA) and explained in early May why he is short both names.

Naturally, investors are curious to hear Chanos' opinion after Tesla offered to acquire SolarCity for $26.50 to $28.50 per share.

Speaking to CNBC, Chanos suggested Tesla's acquisition of SolarCity more of a "bail-out" and represents a "shameful example of corporate governance at its worst."

Related Link: Tesla And SolarCity Among The Hottest Shorts Last Week

Chanos went on to point out that SolarCity's bonds were yielding 20 percent this week and is "headed toward financial distress." He added the company is burning through hundreds of millions of dollars in cash each quarter and is now a "burden" that Tesla and its shareholders will now be forced to bear.

"And if you don't want to believe me, consider this: The combined market drop in the value of both companies is more than the equity value of the deal itself — which means that Tesla shareholders think SolarCity shares are essentially worthless," Chanos said. "Finally, it is hard for me to believe that this deal was not being contemplated when Tesla, and Mr. (Elon) Musk himself, sold shares just a few weeks ago."


Related Articles (TSLA + SCTY)

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