According to the complaint filed in Manhattan federal court, Tesla sold warrants to JPMorgan in 2014 and will be compensated if its “actual price” is below Tesla’s share price when the warrants expire in June. and July 2021.
But Tesla’s share price was up about 10 times by the time the warrants expired, and JPMorgan said this required Tesla contractually to deliver the shares in stock or cash. The bank said Tesla’s failure to do so led to a default.
“While JPMorgan’s adjustments are contractually appropriate and mandatory,” the lawsuit said, “Tesla flagrantly ignored its express contractual obligation to pay JPMorgan in full.”
According to the complaint, Tesla sold warrants to reduce the possibility of stock dilution from the separate sale of convertible bonds and to reduce its federal income taxes.
JPMorgan said it had the right to modify the terms of the contractual warrants following “significant corporate transactions involving Tesla.”
The automaker in February 2019 complained that the bank’s adjustments were “an opportunistic attempt to capitalize on changes in volatility in Tesla’s stock,” but did not challenge the properties of Tesla. basic math, JPMorgan said.