Last month he revealed he had sold $8.5bn worth of shares in Tesla since announcing the takeover, presumably to help fund the deal. Given the size of Musk’s personal financial exposure, he will be under pressure to run Twitter to make money, both to manage his own financial risk and to repay the bank financing.”įirst, let’s look at Musk’s commitment. “Although he has taken steps to reduce his risk by bringing in additional investors, he still has a lot of personal exposure financially, he is paying a high price based on Twitter’s existing business model and he has large loans from the banks. “Musk hasn’t provided a lot of detail about his business plan for the company,” says Jill Fisch, a professor of business law at the University of Pennsylvania. Some experts point to a high-risk structure, regardless of last week’s changes – and what it means for the company he is buying. But the off-the-cuff nature of his comments belie the serious nature of the financial commitments the Tesla tycoon is making. It was a move that swayed shareholders in Twitter and the company’s board, who accepted the bid days later. Musk’s comment about the economics of the bid, in an interview at a TED conference in mid-April, came before he confirmed hastily put-together funding for a takeover. They are putting in $7.1bn, plus a contribution from the Saudi Arabian investor Prince Alwaleed bin Talal, who also plans to roll his $1.9bn Twitter stake into the deal rather than cashing out.Īs part of this reshuffle, the loans secured against Musk’s 15.7% stake in Tesla have been halved to $6.25bn. According to a filing with the US Securities and Exchange Commission (SEC), the equity commitment had risen to $27.25bn, helped by a group of 18 investors including Ellison ($1bn), the Binance trading platform ($500m) and Qatar Holding ($375m), an investment arm of the Gulf state’s wealth fund. The initial funding package behind the takeover, which requires shareholder approval,was initially split into three elements: $21bn in equity, or Elon Musk’s own cash $12.5bn of loans secured against Musk’s shares in Tesla, the electric carmaker that he runs and a further $13bn in loans from a group of seven banks, secured against Twitter itself.
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