Elon Musk drops Tesla-backed loans as part of his Twitter takeover
Elon Musk will no longer use Tesla stock-backed loans in his Twitter takeover, instead adding $6.25 billion in personal funding to the $44 billion deal, according to a new filing with the SEC on Tuesday.
Musk’s initial proposal included a $12.5 billion margin loan – with his Tesla shares acting as collateral – a move that looked increasingly precarious as the electric carmaker’s shares began to tumble. He then cut the loan amount in half before eliminating the remaining balance this week.
Tesla shares have fallen nearly 40% in the past six months amid a broader tech slowdown, including a 25% plunge in the past month alone.
It remains to be seen whether Musk will actually follow through on the deal. Earlier this month he abruptly said the deal was “temporarily suspended” as he demanded more information on whether Twitter had underestimated the number of spam or fake accounts on its platform.
Musk maintained he was still committed to the takeover, although he continued to press the issue – with little evidence – suggesting he was either trying to negotiate a lower price or pull out altogether.
On May 16, Twitter CEO Parag Agrawal widely described the company’s approach to combating spam and estimating illegitimate accounts. Musk responded to the tweets with a poo emoji.
Nonetheless, company executives signaled at a town hall last week that they were unwilling to renegotiate the price of their deal, a source who heard the comments confirmed to The Daily Beast. The terms of the deal will make it difficult for Musk to just walk away. At best, it would likely have to pay a $1 billion severance fee, and Twitter could also take legal action to try to enforce the deal.
Twitter’s stock rose 4% after hours on Wednesday to around $39, although it remains well below Musk’s offer of $54.20 per share.
The billionaire is still looking for help to close the deal. According to the new SEC filing, he is discussing possible investments with existing shareholders, including former CEO Jack Dorsey.