Musk said in a document submitted to the U.S. Securities and Exchange Commission (SEC) on the 21st that Musk’s secured a total of $46.5 billion of fund to acquire Twitter, of which $25.5 billion will be raised by bank loans and $21 billion.
Of the $25.5 billion in debt financing, $13 billion will be entrusted as collateral to Twitter, the company to be acquired, and $12.5 billion will be offered as collateral for his Tesla stake.
In a related development, Bloomberg said on the 25th (local time) that the portion that has not yet been disclosed is $21 billion in “capital raising,” and suggested three possibilities about how Musk will raise equity capital.
First of all, Musk will recruit investors who share his will.
This conforms to the definition of equity capital procurement by issuing stocks or convertible bonds (CB). He indicated that he already had such a strategy in mind. Musk said in a recent TED lecture, “The idea is to have as many shareholders as the law allows.” Under U.S. laws, unlisted companies are generally limited to less than 2,000 shareholders. If Musk acquires Twitter and turns it into an unlisted company, most of the current individual investors have to sell their shares.
However, Musk’s remarks at TED also mean that major shareholders such as Jack Dorsey can remain Twitter shareholders if they agree with Musk’s company vision. Bloomberg said Musk is currently recruiting equity investors and is also in talks with other potential investors.
The second is to sell his stake in Tesla.
Musk will have $21.6 billion worth of Tesla shares in stock options (as of the closing price on the 25th), excluding shares offered as collateral for debt financing, so he can afford $21 billion alone. However, this is a burden on Tesla’s stock price. Tesla shares are down about 8 percent from earlier this month.
In addition, Musk may sell his stake in other companies, such as SpaceX, a space exploration company, and Boring Company, an underground tunnel excavation company, but it is unlikely because it is an unlisted company due to low liquidity.
Barrence, an investment magazine, also judged that Musk would have raised $21 billion in funds that he said he would raise with his own capital without selling Tesla shares. This is because equity capital can be raised with stakes in partners who help Musk’s acquisition of Twitter and existing shareholders who want to remain shareholders even after Musk acquires Twitter. In addition, Musk already has a 9.2 percent stake in Twitter.
