Elon Musk scraps loans and restructures his Twitter offering

Elon Musk has announced a new release plan when buying on Twitter, a move inspired by its decline in net worth due to the decline in the value of Tesla shares.

According to a new filing by the Securities and Exchange Commission acquired by the Wall Street Journal, Musk has added a stake in the deal, a balance to be paid in cash from his personal assets, to $ 33.5 billion. This is the second increase Musk announced in stock financing for its acquisition on Twitter, which was $ 21 billion at the time of the April 25 announcement. The decision means that Musk will no longer rely on “margin loans” or loans obtained through its shares in Tesla, Inc., of which it is the CEO. These loans were $ 12.5 billion, or 28 percent of the original business. The change in trading comes when Tesla’s share price fell last month. Since closing at $ 1,022.37 per share on April 13, the day before the announcement of its offer, the stock has since fallen 36.1 percent and closed at $ 658.80 on Wednesday. The sharp decline caused by several factors, including a decline in capital markets amid rising inflation and supply chain problems, fears of a recession, rising Federal Reserve rates and a lack of investor confidence in technology stocks, of which Tesla is considered one. Musk’s first $ 8.5 billion sale of Tesla shares also came shortly after he announced that he had increased his offer on Twitter. Excess supply, which reduced the price. Tesla shares make up the majority of Musk’s net worth, which now stands at $ 218.8 billion and has fallen $ 66.5 billion in recent months. The lower share price of Tesla means that Musk will have to obtain marginal loans on less generous terms from creditors. For Muska, who has borrowed heavily against his Tesla shares on personal loans, the increased financial exposure to the fall of Tesla shares does not seem attractive, which gives creditors many opportunities.

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In a preliminary Wednesday filing, Musk presented an update to its SEC takeover plans on May 5, which reduced its credit margin to $ 7.139 billion, with funding from 19 different investors. This eclectic list includes Oracle CEO Larry Ellison, Saudi Prince Al-Waleed Bin Talal, the sovereign investment fund of the Qatar royal family and alternative investor Brookfield Asset Management.

However, even if he reduces his margin loans, Musk will have to get new financing to get the new amount. He told the Financial Times that it plans to ask current Twitter shareholders, such as co-founder and former CEO Jack Dorsey, to participate in its offering, bringing it closer to its capital commitment to close the deal.