Tesla counters JPMorgan over bond contract

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Tesla counters JPMorgan over bond contract

Elon Musk, CEO of Tesla, visits the construction site of the Gigafactory in Gruenheide near Berlin, Germany on August 13, 2021. NEW YORK -- Tesla Inc TSLA.O fought back against JPMorgan Chase Co JPM.N over a disputed bond contract and countered the bank for seeking a windfall after Chief Executive Elon Musk's notorious 2018 tweet that he might take his electric car company private.

In a court filing, Tesla accused JPMorgan of bad faith and avarice of owed $162.2 million after unilaterally changing the terms of warrants it received when Tesla sold convertible bonds in 2014.

In a countersuit filed in Manhattan federal court, Tesla said that by changing the terms, JPMorgan dealt itself a pure windfall.

JPMorgan pressed its exorbitant demand as a retaliation against Tesla both for passing over JPMorgan in major business deals and out of JPMorgan executives' animus toward Mr. Musk, it added.

Brian Marchiony, a bank spokesman, said in an email that there was no merit to their claim. It comes down to fulfilling contractual obligations. The counter suit escalates between the largest U.S. bank and world's most valuable car company, which have little business with each other since the disputed contract.

Holdings can buy company stock at a set strike price and date.

In its Nov. 15 lawsuit, JPMorgan said Musk's Aug. 7, 2018 tweet that he might take Tesla private and had funding secured, and his abandoning that plan 17 days later created share price volatility to justify lowering the strike price on its warrants.

JPMorgan accused Tesla of defaulting because it failed to hand over shares or cash when the warrants expired in June and July 2021, by which time Tesla's share price had risen about 10 fold.

In its counter suit, Tesla accused JPMorgan of having put its thumb on the scale to demand even more money, after already receiving a multibillion-dollar payout because of the soaring stock price.

Musk's tweets resulted in a civil lawsuit against the U.S. Securities and Exchange Commission that ended in $20 million fines against both him and Tesla and forced him to give up Tesla's chairmanship.