WASHINGTON (Parliament Politics Magazine)- Elon Musk, the world’s richest man, sold $8.5 billion (£6.8 billion) worth of Tesla shares to fund cash after agreeing to buy Twitter.
Tesla’s CEO has put $21 billion of his own money into the financing package for the social networking platform, which he struck a deal to be bought for $44 billion on Monday. According to filings with the US financial regulator, Musk has sold 9.6 million Tesla shares, or about 5.6 percent of his holding in the company, since then.
The reason for the sale was not confirmed by Mr Musk, but he did say on his Twitter account late Thursday that he had no plans to sell any further Tesla shares “after today.” Tesla stock plummeted on Tuesday, wiping $126 billion off the company’s worth, as investors worried that Musk would sell stock to help fund the all-cash bid for Twitter.
Musk’s Tesla investment is now valued almost $147 billion after the latest share sale, and he remains the company’s top shareholder with a 15.6 percent stake.
Musk is borrowing $12.5 billion to pay the takeover, in addition to his own $21 billion. Another $13 billion will be provided by a bank consortium led by Morgan Stanley. It was unclear how the billionaire planned to raise the remaining equity funding. Musk owns 43.6 percent of the unlisted SpaceX rocket company, which is reputedly worth at $100 billion. According to the Bloomberg billionaires index, Musk’s current net worth is at $250 billion.
According to a source, if Elon Musk completes the acquisition, he may charge websites a fee for quoting viral tweets from verified Twitter accounts.
Tesla’s CEO is also considering a salary restraint for executives, and he has a new CEO lined up to replace Parag Agrawal, the current CEO.
According to Reuters, Musk said he hoped to increase revenue by developing new features such as quoting popular tweets or charging for embedding in an attempt to persuade banks to part-fund the purchase, according to Reuters. When a third-party website wishes to embed or quote a tweet from a verified organisation or individual, a fee would be charged.
According to Reuters, Musk reportedly informed banks that he may decrease CEO and board pay at the firm as he tried to persuade bankers that he could find the cash flow to cover the debt underlying the bid.
According to the article, Musk does not trust Agrawal and is considering replacing him with an anonymous candidate. Agrawal took over as Twitter’s co-founder Jack Dorsey’s replacement in November of last year, but will leave once the transaction is completed. Other recent improvements to Twitter that Musk has mentioned include the removal of advertising from the company’s premium service, Blue.
Although Blue’s availability is limited to only a few countries, including the United States and Australia, advertising accounts for 90% of Twitter’s $5 billion in yearly revenue. The $13 billion loan from banks is seven times Twitter’s estimated earnings before interest, taxes, depreciation, and amortisation for the year 2022.
The sale of 9.6 million shares, at prices ranging from $872 to $999 a share, was Musk’s first since a splurge that raised more than $16 billion late last year, when he asked his more than 80 million Twitter followers if he should sell 10% of his Tesla holdings.