By Hyunjoo Jin and Chibuike Oguh
(Reuters) – Elon Musk gave himself some time off on Thursday, after a judge granted the billionaire’s request to halt a legal action on Twitter to allow him to close his $44 billion takeover plan from the social media company by October 28.
Now comes the big question: how will he pay for it?
Musk said earlier this week he would buy Twitter for $54.20 per share, the price agreed in April, but included a condition that closing the deal would be contingent on debt financing the deal.
WHAT IS ITS FINANCING PLAN?
Musk has pledged to provide $46.5 billion in equity and debt financing for the acquisition, which covers the $44 billion price and closing costs. Banks, including Morgan Stanley and Bank of America Corp, have pledged to provide $13 billion in debt financing to support the deal.
On Thursday, Twitter quoted one of the banks as saying that Musk had not communicated to them his intention to complete the transaction. Musk said the banks were “working cooperatively to fund the close” on or around Oct. 28.
Musk’s $33.5 billion equity pledge would include his 9.6% stake in Twitter, worth $4 billion, and the $7.1 billion he has secured from equity investors, including Oracle Corp co-founder Larry Ellison and Saudi Prince Alwaleed bin Talal.
That leaves Musk needing to secure $22.4 billion in additional funds to cover the equity financing portion of the deal.
HOW MUCH MONEY DOES HE HAVE?
Musk, 51, is the richest person in the world with a net worth of $219 billion according to Forbes, but much of his fortune is tied to his stakes in Tesla and Space X.
According to a Reuters calculation, Musk has about $20 billion in cash after selling part of his Tesla stake through multiple deals in November and December last year and April and August this year. . That means it would need to raise an additional $2-3 billion, even if other equity and debt commitments are honored.
HOW CAN IT MAKE UP THE LACK OF EQUITY?
He can either choose to sell more of his stake in Tesla or his stake in SpaceX. Other options include getting a loan from banks against the shares or bringing in more investors.
In August, Musk said he had no plans to sell more of his Tesla stake, but Musk’s latest U-turn has rekindled concerns over whether he would sell more shares of the electric vehicle maker to fund the agreement.
Musk owned 465 million Tesla shares worth $111 billion after his 3-for-1 stock split, according to Reuters’ calculation. He has already borrowed heavily against much of his stake in Tesla.
ARE THERE ENOUGH STOCK INVESTORS?
On April 20, Oracle founder Larry Ellison said he was interested in participating in the deal as one of Twitter’s investors.
Ellison is part of a group of investors who have collectively pledged to provide $7.1 billion in funding for the deal. So far, no investor has publicly declared that they would renege on their commitments.
(Reporting by Hyunjoo Jin in San Francisco and Chibuike Oguh in New York; Editing by Anirban Sen and Sam Holmes)