Musk is really coming!
According to Musk's Form 13D filed with the SEC, Musk has received about $46.5 billion in financing debt commitment letters to help buy Twitter.
Musk himself pledged $33.5 billion, including $21 billion in equity financing and $12.5 billion in margin loans secured by Tesla shares, to fund the deal, the filing shows. In addition, several banks, including Morgan Stanley, agreed to provide another $13 billion in funding.
That is, half of the $21 billion in cash that Musk himself promised; the other half was about $25.5 billion in debt financing raised at the banks mentioned above.
Musk also said in the regulatory announcement that he is considering bypassing the seemingly assertive board and making a takeover offer directly to Twitter shareholders.
All in all, the money is ready, just send Musk to "give orders"!
How does Musk pay $21 billion out of his own pocket? Tesla shareholders are "sad"
Musk currently has about $3 billion in cash and other liquid assets after spending $2.6 billion on a 9.1 percent stake in Twitter in recent months, according to Bloomberg calculations.
Under the plan disclosed Thursday, the Wall Street Journal reported that Musk would secure a bank loan by mortgageping $62.5 billion of Tesla stock (about a third of the shares) as collateral. As Musk promised to contribute another $21 billion through equity financing, that would likely mean selling Tesla stock or reducing his stake in his unlisted companies SpaceX and Boring Co.
It's unclear whether Musk will sell Tesla's stake to buy Twitter.
But musk is still considering bringing in potential equity partners and has spoken to some interested investors that will help ease his own financial burden, according to sources. Even so, investors are very worried that if Musk sells Tesla shares to fund the deal, it will affect Tesla's normal operations.
Gene Munster, managing partner at Loup Ventures, a venture capital firm that owns Tesla shares, said:
"Musk's attention is distracted. He already has a lot to do and is involved in a lot of different projects. For Tesla's stock price, this is a bearish, which may last for 1 to 3 months."
Musk set up 3 companies, or as part of a plan to acquire Twitter
Musk reportedly filed documents with Delaware this week registering 3 holding companies in the state, all of which contain the words X Holdings in their names. That could be part of Musk's plans to buy Twitter, or it could be his future preparations to group the company under his name into a parent company.
It's unclear how the holding companies relate to Musk's current business, but back in 2012, he considered creating a parent company for his own company. He came up with the idea in 2012. In 2020, he also replied on Twitter to netizens who proposed the parent company: Good idea.
Just last week, in a video interview with the head of TED, he did not reject the idea. He noted that creating such a holding company, Tesla is a public company, "Tesla, SpaceX, Neuralink and Boring have different investor groups, and it is not easy to integrate these companies into one company."
However, before considering the issue of the parent company, Company X may be the first to be used for the Twitter acquisition.
In a filing with the Securities and Exchange Association, Musk mentions that a company called X Holdings 1 was formed under the direction of Musk and a number of affiliates who intend to "directly or indirectly acquire all outstanding stakes in Twitter, or merge directly or indirectly with Twitter."
The company will acquire Twitter's shares through an offer, which could merge with Twitter after the acquisition is successful.
Edit/phoebe
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