Chanos: Tesla-SolarCity Deal Is 'Shameful'

Jim Chanos is not a fan of SolarCity Corp SCTY and Tesla Motors Inc TSLA and explained in early May why he is short both names. Related Link: Chanos: I'm Short Tesla And SolarCity Naturally, investors are curious to hear Chanos' opinion after Tesla offered to acquire SolarCity for $26.50 to $28.50 per share. Speaking to CNBC, Chanos suggested that Tesla's acquisition of SolarCity more of a "bail-out" and represents a "shameful example of corporate governance at its worst." Chanos went on to point out that SolarCity's bonds were yielding 20 percent this week and is "headed toward financial distress." He added the company is burning through hundreds of millions of dollars in cash each quarter and is now a "burden" that Tesla and its shareholders will now be forced to bear. "And if you don't want to believe me, consider this: The combined market drop in the value of both companies is more than the equity value of the deal itself — which means that Tesla shareholders think SolarCity shares are essentially worthless," Chanos said. "Finally, it is hard for me to believe that this deal was not being contemplated when Tesla, and Mr. (Elon) Musk himself, sold shares just a few weeks ago."