Sources: Elon Musk's team has been exploring selling up to $3B in potential new Twitter shares to help repay some of the $13B in debt tacked on for the buyout

Wall Street Journal 2023-01-26

Context & Ripple Effects

Twitter's acquisition financing was already under strain: the banks backing the deal had planned to keep the full $13B debt package on their balance sheets amid a difficult debt market. A contemporaneous review of Musk's options for meeting the debt obligations underscored the urgency of the first interest payments.

The reported equity-sale exploration would shift part of that burden from acquisition debt toward new Twitter investors, rather than relying solely on the operating business to service the buyout financing.

First-order effects

Elon Musk's team would gain a potential source of up to $3B to repay a portion of Twitter's $13B acquisition debt, while new investors would receive Twitter shares.
The banks holding the buyout debt would face lower exposure if proceeds are used for repayment, after retaining the full debt package rather than selling it.

Second-order effects

A share sale would make equity valuation central to Twitter's debt-management strategy, placing greater weight on terms acceptable to prospective investors.
Reducing outstanding debt would lessen the amount Twitter must cover through debt obligations, but would also expand the group of shareholders with an economic stake in the company.

Third-order effects

The episode points to leveraged technology takeovers relying more heavily on post-deal equity injections when debt markets cannot readily absorb acquisition loans.
If this financing pattern persists, banks may demand structures that leave buyers more room to add equity after closing rather than expecting debt syndication to carry the full burden.

The trend: Tight debt-market conditions are pushing highly leveraged technology buyouts toward equity-backed deleveraging after deals close.

Discussion

@elonmusk Elon Musk on x
@StockMKTNewz ... No
@jcoviedo6 JC Oviedo on x
Twitter $3 billion bridge loan with 14.3% interest rate (that increases 0.5% every quarter) needs to be refinanced. Twitter equity is worthless and Twitter can't raise new debt. Elon's choice. Put Twitter into bk or sell $4-5 billion of Tesla stock to pay off the loan. $ElonQ htt…
@ivanthek @ivanthek on x
Dear journalists: This is not a denial. https://twitter.com/...
@tweetermeyer E.W. Niedermeyer on x
“Fidelity, one of the co-investors that backed Mr Musk's takeover of Twitter, has written down its stake in Twitter by 56%, public filings show, suggesting Mr Musk would face an uphill battle raising funds at the original valuation from outside investors” https://www.wsj.com/...
@b52malmet Barbara Malmet on x
He needs another 3 billion because he drove advertisers away and can't make enough selling blue check marks. https://www.wsj.com/...
@lopezlinette Linette Lopez on x
I hope y'all know he's going to have to sell more Tesla stock. https://www.wsj.com/...
@stockmktnewz @stockmktnewz on x
@elonmusk ... Is this story accurate? https://twitter.com/...
@dogeofficialceo @dogeofficialceo on x
I for one think @elonmusk is hilarious https://twitter.com/...
@jeffnolan Jeff Nolan on x
We live in two worlds. The first is the echo chamber led by media narratives. The second is the real world. Tesla reported: - record volumes - orders approaching 2x mfg'ing capacity - record profits https://twitter.com/...
@joelwebershow Joel Weber on x
NEW @BW COVER! The Humbling of Elon Musk: What happens when a distracted billionaire puts his most valuable asset on autopilot, by @chafkin & @danahull https://www.bloomberg.com/... https://twitter.com/...
@elonmusk Elon Musk on x
@BillyM2k @dogeofficialceo Yeah. The corpo media shills clearly have their marching orders to write hit pieces on me these days, but the articles are painfully boring. Reading them is like getting a tranquilizer dart in the jugular.
@kyliebytes Kylie Robison on x
Elon Musk is literally talking about how “popular” he is on Twitter, said he was perhaps the most interacted with account even before the acquisition, and legit checked to see how many followers he has during the Tesla earnings call.
@danahull @danahull on x
“A dented halo is better than no halo” said one of the many people @chafkin and I spoke with for this one https://www.bloomberg.com/...
@billym2k Shibetoshi Nakamoto on x
@dogeofficialceo @elonmusk i think the people who write articles like this are painfully uninteresting
@randfish Rand Fishkin on x
That's some good writing 🔥🔥🔥 https://twitter.com/...
@owasow Omar Wasow on x
Hitting Musk where it hurts: “Musk's tragic flaw is his inability to accept that he's extremely, painfully unfunny. At best, his brand of humor resembles dad jokes from the dad who thinks he can hang...” https://www.bloomberg.com/...
@mhbergen Mark Bergen on x
“He uses Twitter the same way everyone's short-tempered grandpa uses Facebook. He's been wrong a lot, and he refuses to apologize.” Absolute scorcher from ex-Tesla manager in this great @chafkin & @danahull barn burner. https://t.co/MYb08RThSC
@rstephens Robert Stephens on x
Just went for a hike with a very wealthy pal who is selling both his Tesla's likely for a loss and doesn't care. I keep hearing this. https://twitter.com/...
@jessefelder Jesse Felder on x
‘Back when Musk was best known as a crusading environmentalist and his waiting lists stretched for years, buying a Tesla signaled you were part of an elite cohort of early adopters. Today, boasting about your Tesla is somewhere between basic and cringe.’ https://www.bloomberg.com…
@johnauthers John Authers on x
Worth reading, from @BW: Amid falling demand and sudden price cuts, Elon Musk seems determined to take a blowtorch to Tesla's brand https://www.bloomberg.com/... via @BW
@brianreports Brian Eckhouse on x
.@elonmusk's “childish provocations and disastrous business moves, both frequently delivered via tweets, are making him toxic to many customers at a time when Tesla badly needs new business.” A keenly observed @BW feature from @chafkin and @danahull. https://www.bloomberg.com/...
@eelarson Erik Larson on x
“If Elon Musk has a tragic flaw, it isn't his temper, or his treatment of underlings, or his refusal to follow securities laws. Musk's tragic flaw is his inability to accept that he's extremely, painfully unfunny.” https://www.bloomberg.com/... via @BW
@junkscience Steve Milloy on x
The left's campaign to destroy @ElonMusk for saving free speech on Twitter rolls on. https://www.bloomberg.com/... via @BW
@chafkin Max Chafkin on x
TFW u trade dentists in Scarsdale and Marin for Alex Jones viewers and Catturd https://www.bloomberg.com/... https://twitter.com/...
@danahull @danahull on x
I wrote a cover story with @chafkin about Elon and the torching of Tesla's once formidable brand https://www.bloomberg.com/...
@chafkin Max Chafkin on x
Wrote about Musks tragic flaw and the strange, sudden decision to take one of those novelty blowtorches he used to sell to one of the best brands in the world https://www.bloomberg.com/...

Chronicles