Exclusive: Musk’s Twitter deal threats give new funding to ice sources

June 7 (Reuters) – Elon Musk’s attempt to secure new funding to limit his cash contribution to the $ 44 billion acquisition of Twitter Inc. (TWTR.N) The deal has been put on hold due to uncertainty surrounding it, sources close to the matter said.

Musk has been threatening to pull out of the deal unless the social media company provides data to back up its rating of false or spam accounts to less than 5% of its user base. It culminated in a letter to Twitter by Muskin’s lawyers on Monday, warning that he could leave if no further information was forthcoming. read more

Musk plans to pay $ 33.5 billion to finance the deal, after arranging a loan fund to cover the balance. His fortune, valued at $ 218 billion by Forbes magazine, is largely tied to shares of Tesla Inc., so his cash flow is low. (TSLA.O)The electric car manufacturer he leads.

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Musk is considering raising $ 2 billion to $ 3 billion in preferred equity funds from a group of private equity firms led by Apollo Global Management Inc. (APO.N) Sources say it will further reduce his cash contribution. A source said the talks were put on hold until clarity was reached on the future of the acquisition.

The suspension of funding activities provides the first clear indication that Muskin’s threats are interfering with the process of helping to conclude the deal. Twitter has so far insisted that Musk is doing his duty under their contract, including helping to get regulatory approval for the deal.

Musk and Twitter spokespersons did not respond to requests for comment. Apollo declined to comment.

Musk sold $ 8.5 billion worth of Tesla shares in April after signing a deal to buy Twitter. He has raised $ 7.1 billion from a group of equity investors to reduce his stake. Musk sought to further reduce this disclosure by arranging a risky $ 12.5 billion margin loan linked to Tesla’s shares, but canceled it last month.

Preferred equity pays a fixed dividend from Twitter, in the same way a bond or loan pays regular interest, but is valued in terms of the company’s share value.

Buyer’s regret

The uncertainty of the deal also weighs on plans for the $ 13 billion loan that banks have pledged to acquire their books through syndication. Sources said that while preparing to syndicate the loan, the banks plan to wait until clarity in the agreement to start the process.

Sources said that banks do not believe that loan investors will buy loans as long as uncertainty persists. Banks have found Muskin’s contemptuous public comments about the company to be unfounded, and sources added that he now hopes he will help them with investor presentations to syndicate the deal.

Of course, the cessation of these activities will not affect the commitment made by Musk and the banks to finance the contract. Twitter can take them to court and force them if their financial obligations under the contract are low.

Debt syndication could emerge as a major issue for banks to intensify in Musk’s litigation cases with Twitter, and they were forced by a judge to fund the deal. In that situation, if Musk does not want to own the company, they may struggle to get investors to borrow.

However, that possibility is considered remote. Most investors trade shares of Twitter, which they believe are more likely to reach a settlement with Musk or allow him to walk away than the company goes into long-term lawsuits. read more

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Report by Crystal Hu and Greg Rumiliotis in New York Additional Report by Sibuk Oku in New York Editing by Matthew Louise

Our standards: Thomson Reuters Trust Principles.

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