Elon Musk will owe Twitter $1 billion if he can’t get funding

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In this photo photo, Elon Musk’s Twitter seen displayed on a smartphone screen with the Twitter logo in the background in Chania, Crete, Greece, April 23, 2022.

Nikolas Kokovlis | Nurphoto | Getty Images

Elon Musk, CEO of SpaceX and Tesla, could be required to pay Twitter a $1 billion termination fee, under certain circumstances, such as if Musk fails to secure enough debt financing to complete his 44-year deal. billion to buy the company, according to a new SEC filing.

From the filing (Parent is referring to the special company Musk created to buy Twitter):

As described above, if the terms of the Parent Company’s and the Acquiring Subsidiary’s obligations to consummate the Merger are satisfied and the Parent Company fails to consummate the Merger as required under the Merger Agreement, including because the equity, debt and/or margin loan financing is unfunded, Parent will have to pay Twitter a termination fee of $1.0 billion.

On the other hand, Twitter will owe Elon Musk a $1 billion severance fee if he fails to accept a competing offer or if shareholders reject the deal, according to the same filing.

In an interesting side note in the full deal and merger plan, Musk will generally be allowed to tweet about the deal “so long as those tweets don’t disparage the company or any of its representatives.”

The deal is expected to close by Oct. 24, but could be delayed for up to six months for antitrust clearance or other reasons.

Musk offered to buy the company at $54.20 per share and take it private. He said in a filing earlier this month that he had received commitments of $46.5 billion to help fund the deal, including $25.5 billion in debt financing from Morgan Stanley Senior Funding. and other companies, and $21 billion in equity financing.

If the deal goes through, it would represent the end of a remarkable saga that began when Musk revealed a large stake in Twitter, where he has been a devoted user for years. Shortly after, Twitter said Musk would join the board, only to reverse course a few days later. After that, he offered to buy the company.

Musk said Twitter should function as a digital public square that tolerates different viewpoints.

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