Twitter shares jumped more than 7 percent in after-hours trading following a fresh
securities filing showing Elon Musk has boosted the equity commitment in his Twitter buyout to $33.5 billion from $27.5 billion.
The filing stated that Tesla’s CEO has allowed the margin loan commitment provided by Morgan Stanley to expire. The margin loan was backed by Tesla shares, according to a previous filing. Tesla shares were down 45 percent year-to-date.
Instead of relying on a margin loan to fund the transaction, the billionaire has increased his equity commitment by $6.25 billion.
Musk “committed to provide an additional $6.25 billion in equity financing to fund a portion of the Merger Consideration by amending and restating the Amended Equity Commitment Letter,” the filing stated.
Musk is in the process of taking Twitter private for $44 billion. Twitter shares tumbled nearly 20 percent after the billionaire
announced on May 13 that his takeover of the social media platform was “temporarily on hold” until there is more clarity on the website’s spam bots.
The tech billionaire already secured additional financing from a group of investors that include Saudi Prince Alwaleed bin Talal and Oracle co-founder Larry Ellison for his buyout, according to a previous
securities filing on May 5.
The world’s richest man received equity commitment letters from 19 investors, committing to pay $7.14 billion in cash or Twitter common stock, according to the document.
The largest contribution came from the Saudi prince who’s also one of Twitter’s largest stockholders, with a $1.9 billion commitment, followed by Ellison, who agreed to invest $1 billion.
Other investors include Sequoia Capital Fund, Canadian private equity firm Brookfield, asset management firm Fidelity, Qatar Holding, venture capital firm Andreessen Horowitz, and crypto exchange Binance.
According to
CNBC, Musk is in discussions with Twitter founder and former CEO Jack Dorsey and other investors to help finance the transaction or roll over their shares into the new merger.
On April 25, Twitter
accepted Musk’s proposal to take the company private for $54.20 per share in cash, which put the firm’s value at about $44 billion.
To finance the deal, Musk had originally secured $25.5 billion in loans, of which $12.5 billion was a margin loan backed by Tesla stock, according to the
announcement on April 25. In addition, Musk had committed to provide nearly $21 billion in equity capital at the time.
As a result of the increased equity commitments, the margin loan obligation has been “terminated,” according to the new filing.
