Elon Musk is allegedly in discussions with several potential investors to finance his potential Twitter (NYSE: TWTR) acquisition (which may now be shelved) and avoid having to take out a $6.25 billion margin loan linked to his Tesla (NASDAQ: TSLA) stock.
According to Bloomberg, which cited individuals familiar with the matter, the Tesla CEO’s Morgan Stanley advisors have been drumming up support for investments of up to $6 billion in preferred equity financing in an effort to forego taking out a margin loan against Musk’s Tesla stock. Initially, Musk secured a $12.5 billion margin loan, which was later slashed to only $6.25 billion after gaining $7.1 billion worth of equity pledges from various investors including Sequoia Capital, Larry Ellison, and even Saudi Prince Alwaleed bin Talal, whom also threw his Twitter stock into the deal.
The people confirmed that Musk has since secured those funds, which, when combined with the existing financing, will eliminate the need for a margin loan that otherwise would potentially prompt a buyout for both Musk and his financial backers. Moreover, the preferred equity financing would also mitigate pressure on the automaker’s stock, which has fallen over 25% since Musk announced his intentions to purchase Twitter.
Information for this briefing was found via Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.