Nonetheless, the rates of interest on the loans mirror the chance that they may not receives a commission again. The banks don’t maintain on to the loans however promote them to different buyers available in the market, so if Twitter can’t pay its money owed, Mr. Musk will both need to pay these buyers, maybe by promoting extra Tesla inventory, or he may cede some a part of his possession of Twitter, diluting his stake.
Tesla had a market worth of $902 billion as of Friday, however its shares have fallen by almost 20 p.c since Mr. Musk first revealed, in early April, that he had purchased a giant stake in Twitter. If Twitter’s funds go south, forcing Mr. Musk to promote extra Tesla inventory to pay Twitter’s money owed or pledge extra shares as collateral for his private loans, it may put additional strain on Tesla’s inventory worth. Mr. Musk doesn’t take a wage from Tesla however is paid in inventory that’s launched primarily based on efficiency milestones that embody the corporate’s share worth.
Since Mr. Musk first disclosed his stake, the tech-heavy Nasdaq index has fallen greater than 10 p.c, making his provide seem much more beneficiant. “It’s a excessive worth and your shareholders will adore it,” Mr. Musk mentioned in a letter to Twitter’s board. Though the social media firm’s inventory had traded larger than Mr. Musk’s provide simply six months in the past, it slumped far under that worth early this 12 months and seemed unlikely to return to these highs any time quickly.
Mr. Musk has thought of teaming up with funding corporations in his bid to purchase Twitter, which would cut back the amount of cash he would personally have to take a position. He may nonetheless companion with a agency or different buyers like household places of work to assist elevate money, in accordance with two individuals with data of the discussions.
Thoma Bravo, a technology-focused buyout agency, has expressed willingness to supply some financing, however nothing has been determined but. Apollo, an alternate asset supervisor, additionally checked out a attainable deal the place it could lengthen a mortgage on most well-liked phrases.
If the deal math turns into unpalatable for Mr. Musk, he has an out: a breakup payment of $1 billion. For a person with an estimated fortune properly over $200 billion, that’s a small worth to pay.