The banking group originally planned to sell $6.5bn of leveraged loans to investors, along with $6bn of junk bonds split evenly between secured and unsecured notes. That made it seem like there was some doubt as to whether the banks would provide their promised financing, which became a sticking point in negotiations between the company and the billionaire.īut in a court document on Thursday, Mr Musk’s team said that lawyers for the banks “has advised that each of their clients is prepared to honour its obligations". On Monday, Mr Musk sent Twitter a letter saying he would go through with his acquisition “pending receipt of the proceeds of the debt financing". That date comes from a filing from Mr Musk’s team that said the banks needed until then to provide the debt funding. There may be 50 to 80 documents that get discussed, Mr Wicklund said.Ī Delaware judge said on Thursday that if the transaction isn’t done by October 28, she will set new dates in November for the lawsuit between Twitter and Mr Musk. It’s often submitted to banks two or three days before closing, making it one of the last items to be finished.īut leading up to the closing of a big acquisition typically involves a blizzard of paperwork that has to be negotiated between both parties. Usually that document comes towards the end of the process of closing on a purchase, said David Wicklund, a partner at Vinson & Elkins who focuses on complex acquisition and leveraged financing. The lack of a borrowing notice on its own isn’t necessarily a problem. The company said that a banker involved in the debt financing testified earlier on Thursday that Mr Musk had yet to send them a borrowing notice, and had otherwise not communicated to them that he intended to close the deal. Twitter said on Thursday that it's dubious of the billionaire’s promises to close on the transaction. AFPīanks may not be able to back out of the Twitter deal, but Mr Musk has been trying to. Tesla chief Elon Musk and his children Damian, Kai, Saxon and Griffin meet Pope Francis in July at the Vatican. A representative for Mr Musk did not immediately respond to a request for comment. Representatives for Morgan Stanley, Bank of America, Barclays, MUFG and Twitter declined to comment. For example, lenders including Bank of America and Barclays expect to have to fund $8.35bn of debt for the leveraged buyout of Nielsen Holdings next week, Bloomberg reported on Tuesday. That’s forcing banks to provide the financing themselves on a number of deals, a strain on their earnings and capital requirements. While usually banks would sell bonds and loans to fund those deals, investors are less eager to buy now than they were towards the beginning of the year, and offloading this debt will be hard. Junk bond and leveraged loan yields have surged since April, meaning that banks will lose money from having agreed to provide financing at lower yields than the market will accept now.Īny pain the banks bear from this deal comes as lenders have already sustained billions of dollars of writedowns and losses this year after central banks worldwide have started hiking rates to tame inflation.Įven if the banks could find buyers for Twitter debt in the market now, which is far from certain, selling bonds and loans tied to the deal probably wouldn’t be possible before the buyout closes.īanks have a pipeline of about $50bn of debt financing they’ve committed to provide in the coming months, according to Deutsche Bank estimates. “I think that those banks would like to get out of it, I think the deal makes less sense for them now, and that the debt will be harder to syndicate to investors,” said Howard Fischer, a partner at law firm Moses Singer.īut Mr Fischer, a former senior trial counsel at the Securities and Exchange Commission who isn’t involved in Twitter, said there’s no legal basis for them to back out. They agreed to fund the purchase whether or not they were able to offload the debt to outside investors, according to public documents and lawyers who have looked at them. forumlist td.forum_title a.Twitter purchase will drive Elon Musk's 'everything app' project * Forum formatting (by -Algorithm & -Splaka) */īackground: url(/images/4/4e/Forum_new.gif) center left no-repeat * Giving headers and TOC a little extra space */ * Mark redirects in Special:Allpages and Special:Watchlist */ * Font url('/load.php?articles=MediaWiki:Base.css|MediaWiki:Otaku.css|MediaWiki:Wiki_Staff.css|MediaWiki:Navbox.css|MediaWiki:Portal.css&only=styles&mode=articles&action=purge') /***** CSS placed here will be applied to all skins on the entire site.
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