Musk’s bankers may soften burden of Twitter debt

Elon Musk’s bankers are considering providing the billionaire with new margin loans backed by Tesla Inc. stock to replace some of the high-interest debt he layered on Twitter Inc., according to people with knowledge of the matter. Picture: BLOOMBERG

The margin loans are one of several options the Morgan Stanley-led bank group and Musk’s advisers have discussed to soften the burden of the $13bn of debt Twitter took on as part of Musk’s $44bn acquisition, said the sources, who asked not to be identified. Talks have so far focused on how to replace $3bn of unsecured debt on which Twitter pays an interest rate of 11.75%, the maximum banks had guaranteed Musk when they agreed to finance the acquisition in April. Representatives for Musk did not respond at once to requests for comment. Twitter and Tesla, which no longer have communications departments, did not respond to requests for comment.

While the $13bn of debt Musk took to finance the deal sits at the Twitter corporate level, any margin loans against Tesla shares would be taken by the billionaire in a personal capacity. The swap, however, could still make sense considering that Musk has a significant amount of his own money tied up in Twitter equity and given the margin loans would carry a much lower interest rate than Twitter’s unsecured debt, the people said.

Source: Loan Digest (loandigest.net)

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