Elon Musk transferred hundreds of millions of dollars from his artificial intelligence company xAI to prop up social media platform X, according to financial documents shown to investors during this week’s $5.5 billion debt sale.

Banks sold the floating-rate debt at 97 cents on the dollar with an 11% interest rate, the Wall Street Journal reported on Wednesday, exceeding their initial $3 billion target as investors including Pimco and Citadel rushed to participate.

The documents also revealed X now holds a 10% stake in xAI, valued at approximately $5 billion based on the AI company’s $50 billion valuation last year. This ownership structure contradicts Musk’s previous statement that X investors would own 25% of xAI.

The cash transfers from xAI helped X pay its bills and meet debt obligations while advertising revenue was trying to recover. X projects $2.7 billion in revenue and $1.25 billion in adjusted earnings for 2024, down from Twitter’s $5 billion revenue in 2021 before Musk’s takeover.

At Friday’s investor meeting, X CEO Linda Yaccarino and CFO Mahmoud Reza Banki, alongside Morgan Stanley bankers, presented evidence of X’s improving financial health. 

The Journal said that people who attended the meeting described the growing connection between X and xAI as “most striking,” noting the companies share key executives while xAI trains its systems on X’s data. 

The executives indicated growing advertising revenue should reduce X’s reliance on xAI cash transfers in coming months. However, X continues to struggle with break-even operations, with Musk estimating annual interest payments exceed $1 billion.

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