Tesla unveiled Wednesday the details of a much-anticipated offering, aimed at raising $1.15 billion.
Tesla Chairman and CEO Elon Musk discussed the potential capital raise several weeks ago on the company's fourth-quarter earnings call. The additional capital was needed as Tesla moves forward on its production of the Model 3 sedan and to strengthen its balance sheet.
The company said the offering includes $250 million of common stock and $750 million in aggregate principal amount of convertible senior notes due in 2022.
In addition, underwriters will have a 30-day option to purchase up to an additional 15 percent of each offering.
Musk also plans to buy $25 million of common stock, or about 10 percent of the deal.
Tesla finished the fourth quarter of last year with $3.4 billion in cash, an increase of $300 million over the previous quarter.
In the conference call weeks ago, Musk said it wanted to raise the cash to provide a buffer.
At that time, the electric carmaker said in a letter to shareholders that it planned to spend $2 billion to $2.5 billion even before the planned start of Model 3 production in July.
In addition, to the launch of the Model 3, the company also has plans to expand its manufacturing facilities and integrate and grow its recently acquired solar business.
CFRA analyst Efraim Levy said the amount Tesla plans to raise "is on the lower end of our expectations," and he reiterated his "sell" rating on the stock, with $240 12-month price target.
"In addition," Levy said, "the company plans hedging transactions to limit dilution of its common shares. The purpose of the transactions are to improve the balance sheet and support the investments to prepare for the mass-market Tesla Model 3. Lower than expected dilution is a positive, but in our view, risks persist."
Tesla said the hedge transactions will occur concurrently or shortly after the pricing of the convertible senior notes.
Tesla shares were up more than 3 percent in after-hours trading.