Nearly two years after Elon Musk’s acquisition, X’s business is still struggling to climb out of the deep hole it fell into under his ownership.
The $13 billion that Elon Musk borrowed to buy Twitter has turned into the worst merger-finance deal for banks since the 2008-09 financial crisis.
The seven banks involved in the deal, including Morgan Stanley and Bank of America, lent the money to the billionaire’s holding company to take the social-media platform, now named X, private in October 2022. Banks that provide loans for takeovers generally sell the debt quickly to other investors to get it off their balance sheets, making money on fees.
Isn’t the difference here that Musk has a tremendous amount of assets in the form of Tesla stock that can be used to repay the debt? It’s not like he can declare bankruptcy and stiff them on the bill.
The thing is, selling off the amount of Tesla stock that he’d need to to pay off the debt would cause Tesla stock to plummet, leaving him significantly less wealthy and putting Tesla in danger. So even though he technically has the money to pay them, he functionally doesn’t.
He both technically and functionally does have the ability to repay them, which he will find out soon if he doesn’t restructure the debt, and implying this is in anyway similar to the financial crisis is absurd clickbait.
It could possibly tank Tesla and make Elon less rich if he had to pay his debt. Oh no. As if Tesla being valued at more than 9 major other automakers combined isn’t outlandish in the first place.
But won’t someone please think of the oligarch and his shareholders! 🙄
This is so spot on.
Him being kicked out of the billionaire club would be a net gain for humanity
No debt holder is obliged to consider the reprecussions of collecting their debt, just look at house foreclosure. The wellbeing of a thrid party company has no bearing on the ability to pay back a debt, and there are stock sell off plans that facilitate large liquidation over a period of time to ameliorate the stock price drop and prevent it from a full crash. Anyone who tells you otherwise is simply licking billionaire boots.
The person you’re responding to is literally arguing that Elon can’t “functionally” pay the debt because it would make him less rich and lower Tesla’s share price.
Their breath smells like Italian leather.
“Rich Corinthian leather”
If you think for one minute I like Elon Musk, I invite you to check out all the negative articles, including this one, that I’ve posted about that piece of shit. I’d love for him to lose every red cent he’s got. I’ve hated him since before it was cool.
Of course he can, it would just inconvenience him.
Does he seem for even a split second like someone who can handle being temporarily inconvenienced?
Fair enough😂
Oh, so he gets to be treated like the rest of us now…right?
If I stopped paying my mortgage, regardless of how bad off I may be, the bank is taking my house.
Guess he should’ve been more responsible, not eaten avocado toast, and saved more or whatever the fuck conservatives say to struggling millennials and younger folks.
Does the stock necessarily get liquidated for these sorts of transactions though?
Obviously if I owe the bank $100, they will want that in cash, not in $SPY or whatever. But for the Twitter levels of debt could stock just be transferred without being sold first? (Not a rhetorical question, I don’t know how this works.)
I’m guessing here, I don’t think Musk, the person, took out the loans, I think xitter did. So if xitter defaults, Musk’s assets aren’t on the line.
Edit for clarity: ‘leveraged buyout with debt reassignment post acquisition’
No Musk had to take the loans out in order to buy Twitter and turn it into the shit hole that is xitter. Now whether or not they are personal loans or he bought them under another company he owns, that’s a different question.
Xitter may have taken in more loans after Elon’s take over. But a company can’t borrow money to buy itself. So yea his assets are very much on the line. I wonder what deal he struck with the Saudi lenders.
Pretty sure they can. It’s how a lot of private equity firms finance their purchases. Also the reason that Toys R Us went under. They were doing fine except the massive loan payments they had to pay. Those loans financed the companies’ buyout.
‘he only used some of his cash to buy Twitter for $44 billion. For the rest of it, he used a tactic called a leveraged buyout and spent $13 billion of borrowed money on the acquisition. And now Twitter—not Elon—is on the hook for that loan.’
I’m pretty sure they lent him $12B and he largely put up the remaining $30B.