Elon Musk must personally secure $33.5 billion to fund his $44 billion Twitter buyout after allowing a $12.5 billion margin loan against Tesla stock to expire.
Regulatory filings released Wednesday show the Tesla and SpaceX boss committing to “an additional $6.25 billion in equity funding” on top of the original $27.3 billion.
The Tesla boss’s purchase of Twitter was originally based on $21 billion in equity he had to provide, as well as $12.5 billion in margin loans secured by his Tesla stock. This margin loan was reduced to $6.25 billion on May 5, and this additional funding would eliminate it altogether.
This follows suggestions that the world’s richest man could walk away from the deal unless Twitter provides proof of the number of bot accounts on the social media platform.
Some speculated he was trying to lower the price after questioning Twitter’s “less than 5%” claim about fake users.
The change in approach is likely due to the hits Tesla stock took following Musk’s attempt to buy Twitter. The electric carmaker has lost around 25% of its value since the takeover deal, as investors worried about slowing growth, rising inflation and rising interest rates.
The initial margin loan deal was for $12.5 billion until Musk secured $7.14 billion from Larry Ellison of Oracle, cryptocurrency exchange Binance, fund ruler of Qatar and various venture capitalists.
Abandoning the plan will take considerable pressure off Tesla.
Meanwhile, Bloomberg and the Financial Times said Musk is courting other investors like Twitter founder Jack Dorsey, asking him to roll over their stakes to further reduce the funds Musk personally needs to complete the deal. .
At the time of writing, Twitter shares are at $37.16. Musk’s offer is worth $54.20 per share.
Musk wants Twitter to be less censored in content moderation and has suggested changing the platform’s subscription service, banning advertising and offering a cryptocurrency payment option.
He also said he wanted to reverse former US President Donald Trump’s permanent ban, which was imposed after supporters stormed the Capitol on January 6 last year, believing the Joe Biden’s election had been “stolen” – something Trump falsely claimed ad nauseam. .
Speaking at a “Future of the Car” conference earlier this month, Musk described the ban as “a morally wrong and foolish decision in the extreme.”
“Banning Trump from Twitter didn’t end Trump’s voice,” Musk said. “It’s going to amplify it among the right. That’s why it’s morally wrong and downright stupid.”
Analysts are split on whether the Twitter deal will actually go through. ®