Elon Musk is not alone in buying Twitter. Even the richest man in the world has had to make financial maneuvers and ask for help to face an acquisition like this. 44,000 million dollars of which almost half will be paid personally by Musk. We know that the tycoon has enough economic power, but it is divided between shares, properties and investments. How Musk will pay so much cash is one of the great unknowns of the Twitter purchase.
With cash, Tesla shares and loans to various banks. to the best of our knowledge through the SEC, Musk will put 21,000 million dollars out of his pocket, the rest is a loan of 25,500 million to various banks, led by Morgan Stanley, his main financial advisor. In total, Musk has ensured that he has 46.5 billion dollars, slightly more than is necessary for the acquisition of the social network.
Included in that loan to banks is a $12.5 billion loan against their Tesla shares. That is, Musk has used some of his Tesla shares as collateral on which to request part of the credit.
These are the investment banks that have helped Musk. as described Financial TimesMusk’s lenders include Bank of America, Barclays, MUFG, Credit Suisse, BNP, Mizuho and SocGen. It is a debt, where the loan is guaranteed with a value of 62,500 million dollars in Tesla shares.
In addition to the loan against his Tesla shares, it also includes a $6.5 billion senior bank loan, a $500 million revolving credit facility, and $6 billion split between secured and unsecured bridging loans.
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Where did Musk get his $21 billion from? When we talk about these figures, liquidity is a key factor. And according BloombergMusk only had about $3 billion in cash. How have you managed to increase this number so quickly? This is where we enter into different theories, of which several of them could occur at the same time.
The first one is that Musk may have more money than had been calculated; for example due to private investments that have not been taken into account by analysts, such as Bitcoin, Ether or Dogecoin. Although, despite the potential return on these investments, it seems difficult that it was enough to go unnoticed and cover this amount.
The second way is the sale of own shares. We have commented that Musk has used his Tesla shares to ask for credits, but he could have also sold some of them. Not counting the $12.5 billion in credit, Musk still has shares valued at about $21.6 billion. It would be a risky move, as Tesla shares are Musk’s main source of fortune.
The third is perhaps the most viable. Musk could be collaborating with private investors. One of them could be Jack Dorsey, founder of Twitter and who had shares of Twitter worth about $1 billion. Dorsey might just want to keep that part of the investment and could have contacted Musk to help finance the personal part of it.
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Once the initial package is formed, new investors can join the operation. After carrying out the initial financing package, external investors can decide to sign up for the operation, either as equity partners or debt holders. As reported by the New York PostMusk held talks weeks ago with software investment fund Thoma Bravo. It is a great source of liquidity, but it may not be the only one. As calculated by the Financial Times, these private lenders could have helped Musk with more than 10,000 million dollars from him.
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