After a brutal month for Tesla shares, Elon Musk will no longer fund his Twitter purchase by taking out loans against his Tesla-owned stake.
In a presentation to the Securities and Exchange Commission, Musk announced the expiration of a series of margin loans against Tesla shares, which had been included as part of his original financing plan to acquire Twitter. As part of the announcement, Musk pledged to provide an additional $ 6.25 billion in equity financing, raising its total commitment to $ 33.5 billion.
Tesla has lost more than 30 percent of its value since the Twitter deal was signed
Musk’s initial plan to acquire Twitter involved a combination of $ 21 billion in personal capital and $ 25.5 billion in loans. $ 12.5 billion of these loans were secured by shares of Tesla owned by Musk. Musk halved that number with a previous round of capital funding and has now restructured the deal to eliminate them altogether.
The move responds to growing pressure on Tesla lending and stocks in general. The carmaker’s share price has skyrocketed since Musk announced its purchase plan, losing more than 30 percent of its value over the course of a month.
It is unclear where the additional $ 6.25 billion will come from, although several capital partners have emerged since Musk first announced his offer. In early May, Musk announced an additional $ 7 billion in private equity financing, including Oracle founder Larry Ellison, and Qatar’s sovereign wealth fund.
Despite being legally committed to taking ownership of Twitter, Musk has been reluctant about his immediate plans around the deal. On May 13, he stated that the Twitter deal was “pending” pending further investigation of the automated accounts on the platform. More recently, he asked the SEC to investigate the platform’s claims about bot accounts.