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Thursday, October 06, 2022

Debt financing a key sticking point in talks to end litigation and finish merger.



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More from the article...

...nancing," The Wall Street Journal wrote, citing people familiar with the discussions.

According to The New York Times, Twitter "has sought reassurances about how the two sides could guarantee closing and a reaffirmation of the specifics in the previously agreed contract. It's also considering options like court supervision of the closing process and requesting that Musk pay interest to compensate for delays."

Still, Wedbush Securities analyst Dan Ives told Barron's that "Musk should own Twitter by next week," with "minimal speed bumps" standing in the way of closing. A report by The Information also says Musk's turnabout "could mean he will be taking charge of the social media company as soon as next week."...

Musk and Twitter reportedly agreed to postpone Musk's deposition, which was scheduled for today. The trial is still scheduled to begin in less than two weeks, as Delaware Court of Chancery Judge Kathaleen McCormick noted in a ruling yesterday.

"The parties have not filed a stipulation to stay this action, nor has any party moved for a stay. I, therefore, continue to press on toward our trial set to begin on October 17, 2022," McCormick wrote....

Debt financing

Musk's letter to Twitter seeking to complete the original deal said his offer is pending receipt of debt financing. A Reuters report yesterday said financing talks Musk had with Apollo Global Management and Sixth Street Partners "ended months ago around the time Musk started having second thoughts about the deal."

That complication alone shouldn't scuttle the deal, though. Twitter's lawsuit against Musk said, "The deal is backed by airtight debt and equity commitments. Musk has personally committed $33.5 billion."

The Reuters article said that "Musk is expected to provide much of the $44 billion through funds he raised by selling down his stake in electric vehicle maker Tesla and by leaning on equity financing from large investors while major banks have committed to provide $12.5 billion of debt financing."

The New York Times report about this week's negotiations describes some potential snags, though:...

#1 | Posted by LampLighter at 2022-10-06 01:24 PM | Reply


Oops, copy 'n' paste error.

The first paragraph should be...

..."Sticking points include what would be required from both sides for litigation over the stalled deal to be dropped and whether the deal's closing would be contingent on Mr. Musk's receiving the necessary debt financing," The Wall Street Journal wrote, citing people familiar with the discussions....

#2 | Posted by LampLighter at 2022-10-06 01:36 PM | Reply

I know this is just a fantasy, but I hope he takes twitter on a rocket, launches it into outer space and destroys it. There is no greater cesspool of divisive nastiness in the universe than Twitter. (Though DR is trying real hard)

#3 | Posted by Miranda7 at 2022-10-06 02:38 PM | Reply

(Though DR is trying real hard)

Friggin' snowflakes.

#4 | Posted by LegallyYourDead at 2022-10-06 02:46 PM | Reply


Musk Asks Delaware Judge to Halt Lawsuit Over $44 Billion Twitter Deal

...Elon Musk asked a Delaware judge to pause further action in Twitter Inc.'s lawsuit against him, saying the social media company "will not take yes for an answer" after he revived his $44 billion bid.

Musk this week proposed consummating the $54.20-per-share deal to buy Twitter on its original terms, "provided that the Delaware Chancery Court enter an immediate stay of the action" and "adjourn the trial and all other proceedings," according to a letter dated Oct. 3. In Thursday's filing, the billionaire's lawyers said they are now aiming for an Oct. 28 closing date.

Talks between the two sides have been stuck after Musk said that his offer is now contingent on receiving $13 billion in debt financing, Bloomberg reported. Musk said Twitter is resisting halting court proceedings based on the "theoretical possibility of a future failure to obtain the debt financing."

A spokesman for Twitter didn't immediately return an email seeking comment on Musk's request....

Another tactic by Mr Musk to back out of the deal since early court rulings did not seem to be going well for him...

#5 | Posted by LampLighter at 2022-10-06 03:41 PM | Reply


Twitter lawsuit halted so Elon Musk can close deal by Oct. 28

...A Delaware judge on Thursday ordered a halt to Twitter Inc's (TWTR.N) lawsuit against Elon Musk on the eve of trial, giving the billionaire time to finance his $44 billion takeover of the social media platform.

The ruling followed days of uncertainty about Musk's intentions and removed the threat that the erratic entrepreneur would have to testify under oath this week about his claims that Twitter fraudulently misled him.

The judge's order said if Musk, the world's richest person, failed to close by her Oct. 28 5 p.m. EDT deadline, she would schedule a trial for November.

"We look forward to closing the transaction at $54.20 by Oct. 28th," Twitter said in a statement. In an earlier court filing, the company urged the judge to reject the proposal, calling Musk's plan "an invitation to further mischief and delay."...

Musk said in a Thursday court filing banks are working cooperatively to fund the deal but he needed more time. He argued that a brief delay was preferable to the months it would take for a trial and appeal.

Twitter had said Musk should have to close next week and it said a corporate representative for a lending bank testified on Thursday that Musk has yet to send them a borrowing notice and has not communicated that he intends to close.

Major banks that committed to fund $12.5 billion, or about 28% of the deal, could be facing hefty losses as the swift pace of interest rate hikes has ratcheted up market volatility and dampened appetite for leveraged financing.

"There's still some uncertainty based on whether or not Elon can find the actual financing to do the deal," said Randy Frederick, managing director of trading and derivatives for the Schwab Center....

I hope y'all stocked up on popcorn months ago when I first suggested you do so... :D

#6 | Posted by LampLighter at 2022-10-06 07:15 PM | Reply

TWTR closed yesterday at $49.42, and 8.8% discount to Musk's purchase price. I read into this price that the market's confidence the sale will go forward is good, but not certain. The judge in the lawsuit now in the Delaware Chancery Court ruled today that Musk must close the deal by October 28 or there will be a trial, at which Musk will probably lose.

My money is on the following: Musk cannot raise the money to make the buy, and his dodgy behavior is geared toward trying to get TWTR to renegotiate a deal that gave Elon almost no outs in his initial offer. The renegotiation will not take place, because TWTR has its eyes on the $1B breakup fee which they believe will be coming their way, like a great Xmas present. Elon had better find his checkbook...

#7 | Posted by catdog at 2022-10-07 09:25 AM | Reply

Musk is a bigger attention whore than dotard.

He will most certainly break the agreement again.

Now his backers are backing out.

He will use that to back out.

#8 | Posted by Nixon at 2022-10-07 11:45 AM | Reply


#7 | Posted by catdog at 2022-10-07
My money is on the following: Musk cannot raise the money to make the buy, and his dodgy behavior is geared toward trying to get TWTR to renegotiate a deal that gave Elon almost no outs in his initial offer. The renegotiation will not take place, because TWTR has its eyes on the $1B breakup fee which they believe will be coming their way, like a great Xmas present. Elon had better find his checkbook...

Your assumptions are wrong because your math doesn't work.

If TWTR wanted to get $1B in breakup fee, they could get this immediately after Musk backed down and "put on hold / terminated" the buyout agreement, and Musk would be ecstatic to get off this easy, that's what he essentially was trying to do all during this lawsuit drama - he will have to pay at least $11B in taxes on profits from his TSLA stock sales alone that he already has made and expects more to be made this year, to secure financing spelled out in initial agreement, so $1B of tax writeoff to get out of the mess he created would be like a Xmas present for him. Some of potential co-investor PE firms have already dropped out when Musk started trashing Twitter, so he did himself no favors with the "scorched earth" tactics.

It was never about $1B breakup fee. Musk took the bait hook, line, and sinker and TWTR board is making sure he doesn't wiggle out of it, doing what's best for their shareholders - selling TWTR at the highest possible price, which is about $44B at $54.20/share. Math is very simple : $1B = ~$1.25/sh of TWTR - peanuts compared to how much TWTR stock would crash if this deal is not consummated, and would keep dropping due to damage Musk inflicted on company... Of course, Musk being Musk, he could then decide that at much lower price, let's say $34.20 or $24.20 or $14.20 it would make sense to buy TWTR, creating yet another market and legal mess... but since when did that stop him?

The latest and the last try of Musk's lawyers to sneak a stink bomb into the deal - saying he "agrees to the terms of the original agreement" while actually agreeing on the original price but really introducing the new terms in the new agreement - was soundly rejected, so judge played it cool and gave Musk extra time to make sure he has time to confirm the financing from the banks - which should amount to $11B-$13B of total price - and no legal hitches for appeal. Musk has great legal team in Skadden Arps; Twitter has great legal team in Wachtell Lipton, assisted by premier Silicon Valley firm Wilson Sonsini - neither miss much, at over $1000 an hour.

Musk can say he doesn't have the financing, or worse yet, try to sabotage it, but that will only do more reputational damage to himself and his companies, might earn him penalties for duration until closure (with or without his cooperation) and in the end will be just as "successful" as his other excuses to get out of the deal.

This saga is at an endgame and is almost over - Musk will "win" Twitter! "So much winning!"

Elon had better find his checkbook...

That's true, but it will cost him a lot more than $1B breakup fee.

#9 | Posted by CutiePie at 2022-10-08 06:41 PM | Reply

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