Musk's bankers mull new Tesla margin loans to slash Twitter debt: Report

Discussions on this have so far centred around replacing the $3 billion of unsecured debt on which the social platform pays an interest of 11.75%

By Reuters

Published: Thu 8 Dec 2022, 1:35 PM

Billionaire Elon Musk's bankers are considering providing the Tesla Inc CEO with new margin loans backed by the US automaker's stock to replace some of the high interest debt on his Twitter deal, Bloomberg News reported on Wednesday.

The margin loans are one of the options that the Morgan Stanley-led bank group and Musk's advisors have discussed, so as to ease the $13 billion debt that Twitter took on as part of Musk's $44 billion deal, the report said, citing people with knowledge of the matter.

The discussions have so far centred around replacing the $3 billion of unsecured debt on which Twitter pays an interest rate of 11.75 per cent. Many banks had agreed to finance the acquisition in April, the report said.

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Morgan Stanley, Bank of America Corp, Barclays Plc and Mitsubishi UFJ Financial Group Inc led the $13 billion financing for the bid by Musk.

Tesla and Morgan Stanley did not immediately respond to a Reuters request for comment.

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The banks are not expected to offload any of the Twitter debt to institutional investors until the new year, Bloomberg reported.

In October, Reuters reported that banks had abandoned plans to sell the debt to investors because of uncertainty around Twitter's fortunes and losses.

Musk closed the deal with $13 billion in loans from banks and a $33.5 billion equity commitment, which included his 9.6 per cent Twitter stake worth $4 billion, and $7.1 billion from investors, including Oracle Corp co-founder Larry Ellison and Saudi Prince Alwaleed bin Talal.