Technology news

Musk’s revised Twitter offer cuts margin lending, needs more cash

Elon Musk is abandoning plans to partially fund his purchase of Twitter Inc with a margin loan tied to his stake in Tesla Inc and increase the size of the equity component of the deal to $33.5 billion.

Musk will provide an additional $6.25 billion in equity financing for the $44 billion buyout, according to a regulatory filing Wednesday. This is enough to eliminate the same size margin loan, which had already been reduced at the beginning of the month.

The new structure could reduce the risk of the deal for Musk and his lenders, especially given Tesla’s recent share price decline. The electric car maker has fallen around 40% since Musk first announced his stake on Twitter in early April. A protracted slump raised the prospect that he wouldn’t have enough unencumbered stock to cover the margin loan.

Musk, the co-founder of Tesla, is still responsible for providing all of the $33.5 billion in equity. But he can turn to others for help.

Musk is seeking additional funding commitments, including talking with Twitter co-founder Jack Dorsey and other investors about moving their equity into the private company, according to the latest filing. It already announced earlier this month that it had secured $7.1 billion in equity commitments from investors including billionaire Larry Ellison, Sequoia Capital and Binance.

Bloomberg reported earlier this month that Musk had received commitments for an additional $1 billion in equity since that initial round, and his advisers were seeking interest from potential investors for up to $6 billion in funding through preferred shares.

Musk, 50, is the richest person in the world, with a personal fortune of $200 billion, according to the Bloomberg Billionaires Index. This is largely due to his stake in Tesla.

Musk has already sold $8.5 billion worth of Tesla stock to help raise money for his deal on Twitter, tweeting at the time that he had no plans for further sales.

Twitter closed Wednesday at $37.16, well below Musk’s offer price of $54.20. Shares rose 6.8% in after-hours trading at 4:58 p.m. in New York, while Tesla slipped 1.4%.