To pay the bill for the takeover of Twitter, Elon Musk put a part of his personal assets on the table, supplemented by investment funds and other large fortunes, as well as bank loans. Here are the funding details.
Initially, Tesla’s boss only wanted to allocate about $15 billion of his own money to the operation. A significant portion of the package, $12.5 billion, was to come from loans backed by its Tesla shares, preventing it from selling them.
But he eventually decided to offer more cash and to abandon this loan. In two waves, in April and August, the hot 50-year-old sold about $15.5 billion worth of shares in the electric car maker.
The native of Pretoria (South Africa), whose fortune is estimated at about 220 billion dollars by Forbes magazine, will therefore pay directly a little more than 27 billion dollars. Note that he entered the capital at the beginning of the year and already controls 9.6% of Twitter after buying shares on the market.
In addition, about $5.2 billion was contributed by investment funds and large fortunes, in particular the co-founder of the software publisher Oracle, Larry Ellison, who wrote a check for one billion, or Qatar Holding, controlled by Qatar’s sovereign wealth fund, the Qatar Investment Authority.
In return for their investment, everyone will receive shares and become shareholders in Twitter.
This group is completed by Saudi Prince Al-Walid ben Talal, who brought Elon Musk the nearly 35 million shares he already held.
The balance, or $13 billion, is provided by bank loans released by a group of institutions including Morgan Stanley, Bank of America, Japan’s Mitsubishi UFJ Financial Group and Mizuho, Barclays and France’s Societe Generale and BNP. Paribas.
According to documents filed with the US Markets Authority, SEC, Morgan Stanley alone lends about $3.5 billion.
These loans are backed by Twitter, and it is the group, not Elon Musk, who will shoulder the financial burden and repayment.
So far, the Californian company has struggled to turn a profit and in particular has posted an operating loss (result directly linked to activity) over the first six months of 2022. This debt will therefore put the platform under financial pressure.
BANK OF AMERICA
MITSUBISHI UFJ FINANCIAL GROUP
MIZUHO FINANCIAL GROUP