Tesla Inc. TSLA -1.47% countersued JPMorgan Chase JPM -0.09% & Co. on Monday, intensifying a dispute over the payout for a bond sale the bank helped arrange in 2014.
JPMorgan started the fight with a lawsuit in November, claiming it was owed around $162 million more for a set of warrants it had acquired as part of the bond sale. Tesla on Monday said the bank wasn’t entitled to the billions of dollars in stock it got last year from those warrants.
The dispute is lifting the curtain on a testy relationship between the nation’s biggest bank and the world’s most valuable auto maker. JPMorgan has been spurned by Tesla on business dealings and executives at the companies have clashed, including chief executives Jamie Dimon and Elon Musk, The Wall Street Journal has reported.
Tesla claimed that the feud is what is really behind JPMorgan’s suit. It alleged the bank’s actions amounted to “bad faith and avarice.”
“JPM pressed its exorbitant demand as an act of retaliation against Tesla both for it having passed over JPM in major business deals and out of senior JPM executives’ animus toward Mr. Musk,” Tesla alleged.
Mr. Musk said he would write a one-star review on Yelp if the bank didn’t withdraw the suit.
JPMorgan said Monday that “there is no merit to their claim. This comes down to fulfilling contractual obligations.”
The dispute centers on one of Mr. Musk’s more turbulent episodes, when he toyed with taking Tesla private in 2018. He was later forced to relinquish his title as chairman in a settlement with the Securities and Exchange Commission over his tweets about it.
In 2014, JPMorgan acquired warrants from Tesla as part of a convertible bond sale it worked on for the auto maker with other banks. The warrants allowed the banks to acquire stock in Tesla at a set price when they expired in June and July 2021.
JPMorgan has claimed Mr. Musk affected the value of the warrants when he tweeted in 2018 he had the funding to take Tesla private. The bank used his tweets as justification to lower the strike price of the warrants, allowing it to get more profit if Tesla’s stock kept rising.
Last summer, Tesla paid up based on the original price but refused to accept JPMorgan’s change. The bank got what amounted to billions of dollars in stock, Tesla said Monday.
Tesla on Monday said JPMorgan had no right to make the change and demand more money, in part because it said the bank didn’t really believe Mr. Musk would take Tesla private. It said Mr. Musk’s tweets didn’t impact the value and that none of the other banks made the change.
Tesla said the bank broke the contract and instead should have canceled the warrants and returned them. The suit is seeking unspecified damages and fees from the bank.
Write to David Benoit at david.benoit@wsj.com
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Appeared in the January 25, 2022, print edition as ‘Tesla Countersues JPMorgan in Fight Over Warrant Value.’
