Tabby Kinder, Richard Waters, and Eric Platt, reporting for The Financial Times:
The bill for Elon Musk’s purchase of Twitter is coming due, with
the billionaire facing unpalatable options on the company’s
enormous debt pile, ranging from bankruptcy proceedings to another
costly sale of Tesla shares. Three people close to the
entrepreneur’s buyout of Twitter said the first installment of
interest payments related to $13 billion of debt he used to fund
the takeover could be due as soon as the end of January. That debt
means the company must pay about $1.5 billion in annual interest
Musk’s personal equity investment in Twitter of about $26 billion
would be effectively wiped out in the event of a bankruptcy,
alongside other equity stakeholders such as Sequoia Capital,
Oracle co-founder Larry Ellison, and Saudi Prince Alwaleed bin
Talal. In the queue for repayment, their investments would be
behind the banks that have loans secured against Twitter’s assets,
as well as the company’s unsecured lenders and trade creditors.
Boy, you’d just hate to see it.
Meanwhile, with Tesla’s stock falling 65 percent last year and
Musk selling heavily, the value of his stake in the company has
plunged to about $50 billion, from $170 billion when he offered to
buy Twitter in April last year. That has left him with far less
room to raise cash by collateralizing more shares. One alternative
would be to exercise some of his stock options, though that would
leave him with a large — and immediate — tax bill. The biggest
concern for Tesla investors has been if Twitter continues to bleed
cash then Musk may have to sell more stock. [...]
Technology equity analyst Dan Ives at Wedbush Securities said that
Twitter was worth closer to $15 billion today than the $44 billion
Musk paid for it.
Heck, Tesla’s stock is down 25 percent in the last month alone. Heartbreaking.
★ Wednesday, 18 January 2023