Elon Musk seeks to eliminate margin loans from financing Twitter takeover


Tesla CEO Elon Musk is looking to eliminate margin lending by raising more equity and senior financing for his $44 billion Twitter buyout. Terminating a margin loan, which relies on Tesla shares that are in his name, would pose less risk to Musk and the lenders.

According to Bloomberg, who quoted people with knowledge of the matter, Musk’s advisers, including Morgan Stanley, began talking about up to $6 billion in preferred stock funding from potential investors that could help eliminate the whole need margin loans.

Musk had $12.5 billion of the $44 billion tied to margin loans, but was later halved in a massive $7.1 billion filing that showed he had outstanding liabilities. shares of several new investors. Among the largest with Larry Ellison’s $1 billion pledge, but Sequoia Capital, Qatar Holding and Saudi Prince Alwaleed bin Talal also contributed to Musk’s funding round. bin Talal incorporated his Twitter holdings into the deal.

Musk reportedly received more than $1 billion in equity commitments from other investors after securing the first round of funding. He is currently in talks for even more, one of the people said, according to the report.

Elon Musk gets $7 billion more for Twitter takeover, Larry Ellison offers $1 billion

Margin lending hasn’t been a popular topic when it comes to Musk’s Twitter deal, especially with Tesla investors who feel the pressure the margin lending has on the CEO’s holdings is putting a strain on the CEO’s holdings. strong pressure on the action. Musk also sold about $8.5 billion in Tesla assets to fund the deal. Shares of the electric carmaker are currently trading below $730, but fell to $680 during Thursday’s trading. Tesla shares are still up nearly 23% from a year ago today.

Investors have been “hyper-focused” on Musk’s margin lending because he has already pledged more than half of his stock to other borrowings, the report said. That leaves only a limited number of assets he could put up as collateral for the Twitter takeover, but it increases the risk that a drop in Tesla’s stock price could jeopardize the terms of the purchase. Bloomberg said Musk would not have had enough unpledged Tesla shares to cover the margin loan if the stock fell below $837 had he not initially pledged $12.5 billion and sold 8 .5 billion worth of shares last month. Now, Musk could still afford to buy the platform as long as Tesla shares don’t drop below $420 per share.

Disclosure: Joey Klender is a shareholder of TSLA.

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Elon Musk seeks to eliminate margin loans from financing Twitter takeover


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