The Elon Musk plan B is running. The tycoon presented to the United States Securities and Exchange Commission (SEC) that already secured financing to buy from Twitter. In it, Musk indicates that several banks have promised to provide the necessary money to close the operation.
According to document of the SEC, the 46,500 million dollars required to buy Twitter are divided as follows:
- 13,000 million from a debt commitment letter with Morgan Stanley.
- 12,500 million from a loan commitment letter from Morgan Stanley and other financial institutions
- 21,000 million in capital financing
As previously reported, to materialize his new whim, the CEO of Tesla and SpaceX is willing to cover almost half of the purchase by putting his money. The problem is that loans from Morgan Stanley will generate a considerable debt in interest.
In a nutshell, Elon Musk would pay nearly $1 billion each year to own Twitter.
Commitment letters submitted to the SEC as part of the filing set forth the terms of each loan. For the 13,000 million that Morgan Stanley will provide, Elon Musk will have to pay 960 million dollars for interest each year.
The loan of 12,500 million is guaranteed by the shares of Tesla that the tycoon owns. To achieve this, Elon Musk will have to publish 62.5 billion in assets, equivalent to a third of his stake in the company. Bloomberg It indicates that if Tesla shares fall below $560 per unit, Musk will have to post additional cash collateral or repay part of the loan.
Elon Musk is already moving his chips to buy Twitter
Although Elon Musk has not notified the SEC of a public offering, the billionaire is moving his chips and has already taken the first step in his quest to have a social network where “freedom of expression” prevails. Twitter’s board has already activated the poison pill as a defense mechanism to prevent it from acquiring 91% of the shares it lacks.
Elon Musk claims that Twitter Has Extraordinary Potential And It’s Going To Unlock It, for this the social network must stop trading on the stock market to make the necessary changes. Your proposal of cbuy 100% of the company for $54.20 per share It has not been well received by the board and some shareholders.
Outside of Jack Dorsey, the board does not own a significant stake in the company and some have charged that it is operating against shareholder interests. Elon Musk has already confirmed that if he buys Twitter, the first change will be to dissolve the board of directors to save about 3 million dollars per year.
The next chapter of this soap opera is about to happen and the ball is already in Twitter’s court. The board could convince its shareholders not to sell it to Elon Musk in exchange for considerable growth. There’s also the possibility that Salesforce, Disney, or another buyer will show up and get approved.
most likely Elon gets away with it and buys Twitterone way or another.