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Elon Musk commits additional $6.25 billion in equity financing to Twitter (TWTR) deal

Elon Musk is at it again, but this time Twitter's stock isn't tanking... for once.

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Elon Musk has filed an update to his Schedule 13D filing that seems to indicate that he is still planning on completing the deal. Tesla's CEO let his Margin Loan Commitment Letter expire earlier this month, and has now stated that he will pony up an additional $6.25 billion in equity financing.


Here's an excerpt from Musk's Twitter SEC 13D/A filing:

On May 4, 2022, the Reporting Person allowed a portion of the margin loan commitments contemplated by the Margin Loan Commitment Letter to expire, and, after giving effect to such expiration, the Margin Loan Commitment Parties remained committed to provide the Margin Loan Borrower with up to $6.25 billion in margin loans to fund a portion of the Merger Consideration. Concurrently with the foregoing reduction in margin loan commitments, the Reporting Person committed to provide an additional $6.25 billion in equity financing to fund a portion of the Merger Consideration by amending and restating the Amended Equity Commitment Letter, dated as of April 25, 2022, to increase the aggregate principle amount of the equity commitment thereunder to $27.25 billion.

On May 24, 2022, the Reporting Person allowed the remainder of the margin loan commitments contemplated by the Margin Loan Commitment Letter to expire, at which time the Margin Loan Commitment Letter and the commitments thereunder terminated. Concurrently with the foregoing, the Reporting Person committed to provide an additional $6.25 billion in equity financing to fund a portion of the Merger Consideration by amending and restating the Amended Equity Commitment Letter, dated as of May 4, 2022, to increase the aggregate principle amount of the equity commitment thereunder to $33.5 billion (the “May 24 Equity Commitment Letter”).

The Reporting Person (on behalf of himself and Parent) is seeking and the Reporting Person (directly or indirectly through Parent) may receive additional financing commitments to fund portions of the total Merger Consideration, which commitments, subject to the terms of the Merger Agreement and the May 24 Equity Commitment Letter, may replace portions of the financing commitments previously reported by the Reporting Person in connection with the Merger Agreement and the Merger contemplated thereby, including portions of the Reporting Person’s May 24 Equity Commitment Letter described herein. In addition, the Reporting Person (on behalf of himself and Parent) is having, and will continue to have, discussions with certain existing holders of Common Stock (including Jack Dorsey) regarding the possibility of contributing such shares of Common Stock to Parent, at or immediately prior to the closing of the Merger, in order to retain an equity investment in Parent or Twitter following completion of the Merger in lieu of receiving Merger Consideration in the Merger. Subject to the terms of the Merger Agreement and the May 24 Equity Commitment Letter, any such contribution commitments may replace portions of the financing commitments previously reported by the Reporting Person in connection with the Merger Agreement and the Merger contemplated thereby, including portions of the Reporting Person’s May 24 Equity Commitment Letter described herein.


As of the new update, Musk's $44 billion deal to acquire Twitter will be now be financed with a new commitment of $33.5 billion in equity financing, reflecting the $6.25 billion increase from Elon. Tesla shareholders will be happy to know that the deal no longer will require Musk to use his shares of the EV maker as collateral.

This is also an indication that Musk does intend to go through with the deal despite his concerns about Twitter's disclosure of bot information. Today's filing also provided more details of Twitter Cofounder Jack Dorsey's potential involvement in the deal.

The Twitter (TWTR) 15 minute stock chart shows the 12% spike in share price on the news of Musk's 13D/A filing with the SEC.
The Twitter (TWTR) 15 minute stock chart shows the 12% spike in share price on the news of Musk's 13D/A filing with the SEC.

Twitter (TWTR) shares are up nearly 12% in after-hours trading on the news of this filing, but the company is certainly being held hostage by the billionaire entrepreneur. Keep it locked onto Shacknews for more Twitter news as it breaks.


This article is only meant for educational purposes, and should not be taken as investment advice. Please consider your own investment time horizon, risk tolerance, and consult with a financial advisor before acting on this information.

Full Disclosure:

At the time of this article, Shacknews primary shareholder Asif A. Khan, his family members, or his company Virtue LLC had the following positions:

Long Twitter via TWTR shares

Luminary

Asif Khan is the Luminary and majority shareholder of Shacknews. He began his career in video game journalism as a freelancer in 2001 for Tendobox.com. Asif is a CPA and was formerly an investment adviser representative. After much success in his own personal investments, he retired from his day job in financial services and is currently focused on new private investments. His favorite PC game of all time is Duke Nukem 3D, and he is an unapologetic fan of most things Nintendo. Asif first frequented the Shack when it was sCary's Shugashack to find all things Quake. When he is not immersed in investments or gaming he is a purveyor of fine electronic music. Asif also has an irrational love of Cleveland sports.

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