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In reply to the discussion: Elon Musk says his takeover of Twitter is 'on hold.' [View all]LetMyPeopleVote
(145,130 posts)23. Elon Musk tweeted that Twitter deal is temporarily on hold
It is clear that the margin loan structure would not work. This structure exposed both Twitter and Tesla. The new financing is not cheap https://www.bloomberg.com/news/articles/2022-05-12/musk-seeks-to-scrap-tesla-margin-loan-with-new-twitter-funding
The preferred equity may have a 20-year maturity and include a feature allowing interest to be paid in kind at a rate of 14%, the people said. That interest rate would be increased by 75 basis points in the seventh, eight and ninth year, they added. The financing may alternatively be structured with a 10% interest rate and warrants, one of the people said.
See also https://www.zerohedge.com/political/musk-looking-scrap-tesla-margin-loan-secure-new-twitter-funding
According to the report, the preferred equity may have a 20 year maturity, as well as a feature which would allow interest to be paid in kind at 14%. The rate would be raised by 75 basis points in the 7th, 8th and 9th year. Alternatively, the financing may be structured with a 10% interest rate plus warrants.
Musk has announced that this deal is on hold.
Link to tweet
https://www.washingtonpost.com/technology/2022/05/13/musk-twitter-bid/
Tesla has lost $400 billion in market value since Musks interest in Twitter became public in early April, driving a wedge in his acquisition plans at a time when he has committed $21 billion of his wealth to finance the purchase. Musk had planned to buy Twitter with a combination of loans and equity commitments, leveraging into the deal much of his stake in the worlds most valuable automaker from which he derives most of his wealth.
Musks net worth, which makes him the worlds richest man, has fallen by around $50 billion in recent weeks, according to Forbes real-time wealth index. And Tesla stock has shed nearly 30 percent of its value in just the past month.,,,,
Musk has leveraged much of his Tesla stock as collateral for his loans, making the recent economic downturn a particular issue for his bid. Tesla has warned of the risks it faces because of the amount of Tesla stock Musk has put down as collateral. Tesla stocks were trading at under $730 on Thursday, well below the more than $1,100 mark from early April. A drop by several hundred more dollars could trigger requirements that would force Musk to sell some shares, analysts said.
At one point last year, he had put down more than half of his shares as collateral, according to financial filings. Because the Twitter bid would only add to that percentage, Musk has faced pressure to reduce his equity commitment, according to people with knowledge of the matter who spoke on the condition of anonymity to discuss sensitive matters.
Link to tweet
Musks net worth, which makes him the worlds richest man, has fallen by around $50 billion in recent weeks, according to Forbes real-time wealth index. And Tesla stock has shed nearly 30 percent of its value in just the past month.,,,,
Musk has leveraged much of his Tesla stock as collateral for his loans, making the recent economic downturn a particular issue for his bid. Tesla has warned of the risks it faces because of the amount of Tesla stock Musk has put down as collateral. Tesla stocks were trading at under $730 on Thursday, well below the more than $1,100 mark from early April. A drop by several hundred more dollars could trigger requirements that would force Musk to sell some shares, analysts said.
At one point last year, he had put down more than half of his shares as collateral, according to financial filings. Because the Twitter bid would only add to that percentage, Musk has faced pressure to reduce his equity commitment, according to people with knowledge of the matter who spoke on the condition of anonymity to discuss sensitive matters.
It will be interesting to see of Musk can pull off this deal. It is clear that this deal will not be financed based on margin loans using Tesla stock
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Of course he will, and he is trying to avoid the one billion dollar breakup fee he would owe.
JohnSJ
May 2022
#2
Yes. Some are speculating that he is trying to drive the price down, and renegotiate a lower price
JohnSJ
May 2022
#51
I think not just as an out of the Twitter deal - I think to purposely ruin Twitter
Pachamama
May 2022
#52
"Musk knows as well as anyone Twitter is also a great tool for market manipulation and securities
sop
May 2022
#30
Oh seriously, fuck this guy and everybody who cares what he says. At some point his $ doesn't matter
FreepFryer
May 2022
#6
"a way to get the stocks to fall to where his Tesla holdings will be enough to purchase it."
BumRushDaShow
May 2022
#17
Just yesterday, that news that the Milky Way's black hole is precisely the size he predicted!
JudyM
May 2022
#46
Playing the media world like a drum...he sure know how, no one can argue that.
Alexander Of Assyria
May 2022
#24
PPS down 4.50 so he can buy millions of shares and POOF tomorrow the deal in back on
Bengus81
May 2022
#32