During a Zoom hearing on Tuesday, the
shareholders asked that Musk be ordered to return the stock he received from
the deal and pay Tesla $13 billion.
The all-stock deal was valued at $2.6
billion at the time, but Tesla stock has gone up massively since then.
In July 2021, Musk testified in a 10-day
lawsuit over the acquisition, with his lawyers saying the CEO recused himself
from board discussions and negotiations relating to the acquisition of
SolarCity, a purchase that was approved by 85% of shareholders at the time.
The resounding question is whether or not
Musk exerted undue influence over the transaction and whether he and other
board members concealed information relating to the transaction from
shareholders.
“This case has always been about whether
the acquisition of SolarCity was a rescue from financial distress, a bailout,
orchestrated by Elon Musk,” said Randy Baron, an attorney for shareholders, at
the hearing, Reuters reported.
The lawsuit by union pension funds and
asset managers said that SolarCity “had consistently failed to turn a profit,
had mounting debt, and was burning through cash at an unsustainable rate,”
noting that the company had accumulated over $3 billion in debt in its 10-year
history, nearly half of which was due for repayment by 2017.
Musk’s attorney’s argued back in July that
the acquisition was part of the CEO’s long-term vision to transform Tesla into
an energy company.
The CEO has said that combining SolarCity
and Tesla was the key to his vision of combining Tesla’s battery storage
product, Powerwall, with its solar roof panels.
At the hearing on Tuesday, Evan Chesler,
one of Musk’s lawyers, alleged that the deal was not a bailout and that
SolarCity’s finances were on par with many high-growth tech companies.
“They were building billions of dollars of
long-term value,” said Chesler, according to Reuters.
Things got a bit spicy when shareholder
attorney Lee Rudy asked Vice Chancellor Joseph Slights of Delaware’s Court of
Chancery to consider the contempt Musk held for the deposition and trial
process, in which he repeatedly insulted shareholder attorneys.
Slights said he expects to rule in about
three months, around the same time he expects to retire.