Wall Street Banks Step Up to Finance Musk’s Pursuit of Twitter
(Bloomberg) -- Wall Street banks, and some international ones too, showed up in force to back Elon Musk’s run to buy Twitter Inc.
In all, $25.5 billion would come in the form of multiple types of debt from a dozen banks across Wall Street and the rest of the world, according to a regulatory filing Thursday. Morgan Stanley, Musk’s adviser, has pledged to provide the biggest chunk: about $5.5 billion.
The disclosure comes after a week of investment bankers scrambling to get involved in what could end up being the biggest take-private of all-time. While Musk is unpredictable and didn’t get very far with his 2018 plan to take Tesla Inc. private, banks -- with the exceptions of Goldman Sachs Group Inc. and JPMorgan Chase & Co., which are advising Twitter -- appear ready to bet on Musk and the chance for windfall of fees if a deal materializes.
The only other bulge bracket missing from the lineup is Wells Fargo & Co.
The package includes a $13 billion debt commitment letter with about 90% of it coming from Morgan Stanley, Bank of America Corp., Barclays Plc. and MUFG Bank.
Three other banks -- BNP Paribas SA, Mizuho and Societe Generale -- agreed to contribute the rest. That includes a $6.5 billion senior secured term loan facility and a $500 million senior secured revolver.
There’s also a senior secured bridge loan of up to $3 billion and an unsecured bridge loan of up to $3 billion -- both of which will likely take the form of bonds.
The banks won’t wait around forever though. Musk has about 75 days to execute on a deal: that $13 billion debt commitment will expire if an acquisition agreement hasn’t been executed by July 4, unless the commitment is extended, according to the filing.
Musk got a separate $12.5 billion margin loan commitment letter from Morgan Stanley, Bank of America, Barclays, MUFG, Credit Suisse Group AG, BNP Paribas, Citigroup, Deutsche Bank, Mizuho, Royal Bank of Canada, Societe Generale and Canadian Imperial Bank of Commerce. That loan includes a condition that requires Musk to satisfy a maximum loan to value ratio of 20%, which is expected to be satisfied by Musk contributing some Tesla shares to the borrower.
The margin loan commitments are available to Musk until 11:59 p.m. in New York on May 4.
Besides the debt package, Musk is also committed to providing $21 billion of equity financing for the potential deal. That likely won’t come out of his own pocket. Musk and his advisers will spend the coming days vetting potential partners, Bloomberg News reported.
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