Twitter (NYSE:TWTR) is once again in the spotlight after Elon Musk disclosed financing details in an amended 13D filing for his buyout offer. In the filing, Musk states that he is willing to put up a total of $46.5 billion in debt and equity financing to acquire Twitter. The Tesla (NASDAQ:TSLA) CEO has enlisted the help of Morgan Stanley (NYSE:MS) and other financial firms to assist in funding the TWTR stock offer. Musk currently owns a 9.1% stake in the social media platform. Additionally, Musk’s position remains unchanged from his previous 13D filing.
Here’s what else investors should know about Musk’s plan.
Elon Musk Discloses TWTR Stock Financing Details
Out of the $46.5 billion, Musk is willing to cover $21 billion by himself. Meanwhile, Morgan Stanley and other firms have stated they are willing to lend $12.5 billion. That would be in the form of margin loans against some of Musk’s ownership of TSLA stock. The remaining $13 billion will consist of debt financing from Morgan Stanley and other firms in the form of a $500 million revolver, a $6.5 billion term loan, a $3 billion secured bridge loan and a $3 billion unsecured bridge loan.
Bridge loans are short-term loans that are usually backed by collateral, such as real estate. The loans are used until a “person or company secures permanent financing or removes an existing obligation.” Furthermore, the 13F filing states that Musk is “prepared to begin such negotiations immediately.”
Additionally, the filing discloses that Twitter has yet to respond to Musk’s original offer. As a result, Musk is “exploring whether to commence a tender offer to acquire all of the outstanding shares of Common Stock.” A tender offer is an offer to company shareholders instead of the board. Plus, a tender offer does not require approval from the board.
Significantly, this 13D filing shows that Musk feels determined about acquiring Twitter. Before, some investors were speculating that Musk would simply dump his position for a quick gain.
Twitter Responds to New 13D Filing
A spokesperson from Twitter announced that the company had received Musk’s offer and stated:
“We are in receipt of the updated, non-binding proposal from Elon Musk, which provides additional information regarding the original proposal and new information on potential financing. As previously announced and communicated to Mr. Musk directly, the Board is committed to conducting a careful, comprehensive and deliberate review to determine the course of action that it believes is in the best interest of the Company and all Twitter stockholders.”
While there’s not much to read into in the statement above, we will likely hear more in the coming days. For now, it appears that Twitter is in a period of uncertainty with a price ceiling near $54.20.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
