Tesla 'Very Unlikely' to Do a Traditional LBO, Says GSO's Scott

The transcript discusses the challenges of taking a company private through a leveraged buyout (LBO), highlighting the difficulty of adding leverage to a company with negative cash flow and operational issues. It compares the situation to Dell's smaller-scale LBO, emphasizing the importance of market access and convertible debt. The conversation also explores the implications for retail investors and the complexities of managing equity in a private company.

What is a major challenge in executing a traditional LBO for a company with high enterprise value?

• Lack of interest from investors

• Excessive free cash flow

• Too many operational issues

• Difficulty in adding more leverage

How does the current company's situation differ from Dell's past privatization?

• Dell faced more operational issues

• The current company has positive cash flow

• Dell had a smaller enterprise value

• The current company has more free cash flow

Why is it difficult for the company to secure additional funding?

• It is already a private company

• It has too much free cash flow

• It has negative cash flow and operational issues

• It has a high credit rating

What is a limitation of convertible debt in a private company?

• It cannot be tied to equity

• It is not allowed by law

• It is too expensive

• It is only available to public companies

What challenge does a company face when transitioning from public to private regarding retail investors?

• Retail investors can dictate company policies

• Retail investors have more voting power

• Retail investors are not qualified to purchase certain securities

• Retail investors can easily convert their shares