Elon Musk needs to secure more cash to power Twitter deal • The Register - Fix Bdsthanhhoavn

Elon Musk needs to secure more cash to power Twitter deal • The Register

Elon Musk must personally secure $33.5 billion to fund his $44 billion Twitter purchase after allowing a $12.5 billion margin loan against Tesla stock to expire.

Regulatory filings released Wednesday show the Tesla and SpaceX boss agreeing to secure “an additional $6.25 billion in equity financing” on top of the original $27.3 billion.

The Tesla boss’s Twitter purchase originally relied on $21bn of equity that he had to provide along with $12.5bn in margin loans secured by his Tesla stock. That margin loan was dropped to $6.25bn on May 5, and this additional financing would eliminate it altogether.

This follows suggestions that the world’s richest man could walk out on the deal unless Twitter provides proof of the number of bot accounts on the social media platform.

Some assumed he was trying to bring the price down after calling into question Twitter’s “less than 5 percent” claim about fake users.

The change in approach is likely due to the beating that Tesla stock has taken following Musk’s attempt to buy Twitter. The electric carmaker has lost about 25 percent of its value since the takeover was agreed, with investors worried about slower growth, rising inflation and interest rates that are edging ever higher.

The original margin loan agreement stood at $12.5 billion until Musk hoovered up $7.14 billion from Oracle’s Larry Ellison, cryptocurrency exchange Binance, Qatar’s sovereign wealth fund, and various venture capital outfits.

Abandoning the plan will take considerable pressure off Tesla.

Meanwhile, Bloomberg and The Financial Times said Musk is courting additional investors like Twitter founder Jack Dorsey, asking him to roll over their equity stakes to further lower the funds Musk personally needs to power the deal.

At the time of writing, Twitter shares stand at $37.16. Musk’s offer is worth $54.20 per share.

Musk wants Twitter to be less censorious in content moderation and suggested changing the platform’s subscription service, banning advertising, and giving an option to pay in cryptocurrency.

He has also said that he wishes to reverse former US president Donald Trump’s permanent ban, which was brought after supporters stormed the Capitol on January 6 last year under the belief that the election of Joe Biden was “stolen” – something Trump falsely claimed ad nauseam.

At a “Future of the Car” conference earlier this month, Musk described the ban as “a morally bad decision, and foolish in the extreme.”

“Banning Trump from Twitter didn’t end Trump’s voice,” Musk said. “It will amplify it among the right. This is why it’s morally wrong and flat-out stupid.”

Analysts are split on whether the Twitter deal will actually complete. ®

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