Tesla Inc (NASDAQ:TSLA) accused JPMorgan Chase & Co (NYSE:JPM) of “bad faith and avarice” in an increasingly bitter legal battle following a series of controversial tweets from the electric carmaker’s founder Elon Musk.
The world’s most valuable car manufacturer made the claims in legal papers filed to the Manhattan federal court on Monday in response to a US$162mln lawsuit by the US bank in November, Reuters reported.
JPMorgan has accused Tesla of defaulting over warrant payments. The row erupted in 2014 when the bank had agreed a deal to buy warrants on Tesla’s stock.
But Musk's tweets claiming he was thinking of taking the carmaker private forced JPMorgan to adjust the strike price. As a result, the bank said it was entitled to an additional US$162mln in cash or shares.
According to the Reuters report, Tesla countered claims the bank changed the terms of the warrants when Tesla sold convertible bonds in 2014, which “dealt itself a pure windfall” following a multibillion-dollar pay-out from Tesla’s soaring share price.
"JPMorgan pressed its exorbitant demand as an act of retaliation against Tesla both for it having passed over JPMorgan in major business deals and out of senior JPMorgan executives' animus toward Mr. Musk," Tesla said in a statement.
The bank said Elon Musk’s 2018 tweet regarding taking Tesla private caused volatility in the share price.
JPMorgan said the warrants allowed it to lower the strike price and counteract any economic impact caused by “significant corporate transactions.”
As a result, it accused Tesla of defaulting as it failed to hand over shares last summer, when the warrants expired, and the price of Tesla shares had risen 10-fold.
A warrant enables the holder to purchase shares at a pre-agreed or 'strike' price.