arthwollipot
Limerick Purist Pronouns: He/Him
Yeah, I'm with Zaganza on this one. It's bad business practice (and possibly illegal) to mix personal finances with business finances.
Puppycow
Penultimate Amazing
I'm talking about whether he will ever recoup his investment. Sure, if Twitter goes bankrupt, that's different from Musk himself going bankrupt. But then Twitter's creditors will end up owning it.
How Elon bought Twitter with other people's money
So he paid $31 billion of his own money, right? And borrowed another $13 billion for the rest, which is owed by Twitter, not him personally.
But if Twitter at some point in the future is unable to pay off those loans, he will either have to find a way to raise more money (from people who will naturally want something for their investment) or make the payments himself, or have the company declare bankruptcy, in which case he may no longer own the company anymore. At a minimum he's out $31 billion if Twitter never returns to profitability.
jeremyp
Philosopher
Of course there’s a difference. Musk owns Twitter but their finances are separate. Twitter is a limited company. If Twitter goes bankrupt, Musk is not also bankrupt.
Like me taking out a buy-to-let mortgage and persuading the bank that the house should owe the debt not me. And, I would like to see if Musk is charging Twitter any management fees, which KKR or Black Rock do when they buy companies (via leveraged debt)
Puppycow
Penultimate Amazing
A house cannot owe money, but you could create a company, ("Jimbob's Estates") and have the company borrow the money to buy the house. Then the company, not you, would be responsible for the debt. If this arrangement is acceptable to the bank, I don't see why it couldn't work in principle.
Gulliver Foyle
Philosopher
No he can't, most of the debt notes are held by Mohammed bin Salman ibn Saud.
Plus, because Twitter was such a bad purchase, Musk had to secure debt on Tesla stock.
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lobosrul5
Philosopher
Are you implying that Musk will be assassinated by the Sauds if he defaults? Else, his debt is the same as any other.
Nothing even remotely unusual with stock being used as loan collateral.
The worst legal consequence for Musk over the Twitter deal is he loses control of Tesla.
I guess the really worst case for Musk is he becomes short one head.
The Great Zaganza
Maledictorian
- Joined
- Aug 14, 2016
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- 29,958
he can't because he would be invited to a Tea and Dismemberment Party?
because I don't see a legal reason why he couldn't.
jeremyp
Philosopher
Definitely not unusual to use stock for loan collateral. It's really the only way that Musk can convert his paper billions into real money, because
a) if he sells shares it impacts the price of Tesla stock making him technically poorer
b) the profits from any shares he sells are liable for tax.
In fact, it is estimated that around 90% of Musk's Tesla shares are pledged as loan collateral.
lobosrul5
Philosopher
I would think, his creditors would just take over the pledged shares if he defaults, not sell them. Yes if Musk put in a market sell order for his entire holding of Tesla the price would crash... heck it might cause the NASDAQ to halt trading.
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Gulliver Foyle
Philosopher
Assassination is such an ugly word, please use conscious dismemberment.
Oh and if Musk loses his Tesla stock he's no longer wealthy because so much of his net worth is tied up in it. Like most ultra rich people Musk takes his income in stock options as a tax dodge (it's much cheaper to take out loans on stock and pay interest on same than to take pay and pay income tax and pay related insurance on same, hence why capital gains and stock options should be treated exactly like a salary income).
But tying up $44bn of his personal wealth in loans for a company he's destroying is a massive issue down the line financially.
jeremyp
Philosopher
I think that would depend on whether the creditors wanted Tesla stock or not.
No he doesn't need to sell his entire holding to affect the price, and Tesla doesn't have to crash to put him in jeopardy. All the shares pledged as collateral have to maintain a certain price or they won't cover the loans. If that happens, Musk either has to repay some of the loan or pledge more stock. He hasn't really got that much more stock to pledge.
angrysoba
Philosophile
Two liberal ex-professors are shocked SHOCKED that there are parts of Twitter that one of them calls Nazi Twitter. He explains that when he says Nazis, he means Nazis! Apparently some of these guys like Hitler. But the worst thing is that he has found out that many of the people he likes are hanging out with these Nazis, including his defenders and some others who were on the same side as him on Covid.
His wife is similarly shocked to find out that her own intolerant friends apparently don't believe in women voting.
It's hard when these two were such big proponents of Elon Musk that they began that whole #gotyourbackElon hashtag that everyone will recemember.
Anyway, enough of my waffling, just listen to these two.
His wife is similarly shocked to find out that her own intolerant friends apparently don't believe in women voting.
It's hard when these two were such big proponents of Elon Musk that they began that whole #gotyourbackElon hashtag that everyone will recemember.
Anyway, enough of my waffling, just listen to these two.
jeremyp
Philosopher
Twitter sure has a lot of money for lawyers considering they're not paying their bills.
https://arstechnica.com/tech-policy...ays-after-she-called-for-tesla-investigation/
Apparently, some Tesla shareholders are asking about the Tesla employees that were used by Musk when he initially took over Twitter.
https://arstechnica.com/tech-policy...ays-after-she-called-for-tesla-investigation/
Apparently, some Tesla shareholders are asking about the Tesla employees that were used by Musk when he initially took over Twitter.
I mean Twitter's brand was getting trashed, but it was still worth more than the replacement.
Also trying his "X" brand to the prominent binfire he's creating in Twitter is a very strong negative for the rest of his companies.
TurkeysGhost
Penultimate Amazing
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Musks fortune is in no small part due the the fact that he got fired from Paypal before his terrible ideas could run that company into the ground, but now he's on a position where it's much harder for anyone to stop him from commiting business suicide.
Upchurch
Papa Funkosophy
You mean X, the universal UI element for quitting out of something on a computer?
That's the kind Musk intelligence, foresight, and leadership we come to expect.
That's the kind Musk intelligence, foresight, and leadership we come to expect.
Jack by the hedge
Safely Ignored
- Joined
- Oct 14, 2009
- Messages
- 23,425
So in the case of Musk buying Twitter, which entity borrowed the money and which entity consequently paid for and owns Twitter?
jeremyp
Philosopher
https://www.reuters.com/markets/us/how-will-elon-musk-pay-twitter-2022-10-07/
Musk had to raise $46.5 billion to cover the asking price and other costs.
Banks provided £13 billion in loans
Musk's holding in Twitter came to about another $4 billion
Investments from other parties like Larry Ellison and Saudi Arabia came to around £7 billion
Musk raised the rest presumably by selling Tesla shares.
The entity that bought out Twitter was a corporation called X Holdings, created by Musk specifically for the purpose. X Holdings is a holding company that has one subsidiary, noew called X Corp and X Corp is what used to be Twitter.
The $13 billion in loans were transferred to Twitter on acquisition.