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Monday, December 5, 2022

Who Helped Finance Musk’s Twitter Purchase

A banner above the New York Stock Exchange with the Twitter logo and the word @twitter below it.

The banner hung above the New York Stock Exchange back in 2013 when the company first went public. Now that the company is private again, there’s quite a few ex-stock holders who are hoping to see a return on their investment in Elon Musk.
Photo: Christopher Penler (Shutterstock)

While Elon Musk’s massive $44 billion buyout of Twitter might seem like a one-man show, it’s really a kind of Suicide Squad of big tech moguls and financiers coming together in a strange rogue’s gallery reunion. Not only were Musk’s personal rich friends in the mix, but the holding companies of Middle Eastern nations and a few moneyed crypto supporters jumped in head first. All of them have Musk’s ear and are looking to steer Twitter in one direction or the other.

As much as this last week has seemed like a migraine-inducing dive into one man’s ludicrous, single-minded pursuit of making Twitter profitable, it’s also just as likely that Musk is feeling the pressure from the more than 20 companies, venture firms, banks, and at least one Saudi prince who have certain expectations of a return on investment.

But despite their hopes, investors may have already lost out. Because Musk spent so much time trying to back out of the Twitter deal, he caused the company’s stock price to waver and generally sink, not to mention that many of the biggest tech companies have not done too hot in 2022. That original $54.20 per share asking price has become a greater rock to bear over these last few months.

One of the heads of Manhattan Venture Partners, Andrea Walne, admitted to Business Insider back in October “we’re all trying to get out of it,” referring to the Twitter deal. They were especially unhappy with what they were paying for a company that might look more like a $10 billion or $12 billion company, rather than the $44 billion they were expecting to partly shoulder. MVP put a noted $7.1 billion equity into the Twitter deal.

Alex Spiro, Musk’s attorney, told Insider that “the vast majority of equity investors have been spoken to and are all in.” So far, we don’t have a singular idea on how many of those who promised funds are all paid up.

With some advertisers looking to cut ties with Twitter, the platform could be hurting for funds as time goes on. Musk himself noticed that Twitter has had “a massive drop in ad revenue” and further blamed “activists” for pressuring advertisers off the platform.

Musk took out nearly $13 billion in loans for his purchase, and he’ll be spending years paying the interest off those loans. Now that Twitter is a private company, those loans and interest payments are being laid like a steaming cow patty on Twitter’s financial books. Bloomberg has reported that Musk will need to pay $1 billion on that debt every year for the next few years. Back in April, The New York Times warned of this exact situation where Musk and Twitter could lose enough advertising that paying back loans appears to be a harsher prospect.

Other than the loans and equity investments, most of the funds came from the world’s richest man himself, around $25 billion, though to this day we still don’t know if there were more folks who chipped in, according to The New York Times. The billionaire sold Tesla shares and used more shares as collateral for these loans, according to past Securities and Exchange Commission filings.

Bloomberg puts Musks’s total net worth at a little under $200 billion. Though his status as the world’s wealthiest man remains intact, he—like much of the globe’s ultra wealthy—have seen declines. It’ll be interesting to see how the ongoing Twitter debacle impact’s Musk’s wealth. He’s certainly got the time, and the platform, to whine about it more than ever.

All the info included in this article is what we know up to this point. It’s unclear which investors have paid up and if others got cold feet. We’ll keep updating this post if more information comes out down the line.

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