How Elon Musk Managed to Convince Banks For Financing Proposed Twitter Deal?

Zinger Key Points
  • Elon Musk's charisma and detailed vision won over banks, which have been roped in to lend funds for Twitter buy
  • The Tesla CEO has a vision for running Twitter and growing its topline

Elon Musk disclosed in a filing on Thursday that he has received commitments for $46.5 million in debt financing to buy Twitter, Inc. TWTR. The announcement came a week after he launched his hostile takeover bid, and the social media platform reacted with the adoption of a poison pill.

In a week's time, how did Musk manage to rally the bankers around him?

Musk Details Vision: The Tesla, Inc. TSLA CEO shared his vision for Twitter, which went a long way toward convincing a bevy of banks to give commitments, according to a report by Bloomberg.

The banks were apparently impressed by Musk's plan to increase Twitter's debt without taking the company's credit rating to junk levels, the report said, citing people familiar with the plan. The plan introduced in the form of a presentation on a call last Monday detailed Musk's thoughts on how Twitter's business could be run and topline could be grown, along with his views on the company's financial profile.

Musk also spoke directly to some of the top lenders, with his discussion about his plans for Twitter oozing with enthusiasm, the report added.

Related Link: Elon Musk References 1989 Bestseller On RJR Nabisco Leveraged Buyout; Is He Closing In On Twitter Buy?

This was the culmination of efforts since April 9, when Musk's team approached the lenders and engaged with them through Easter Sunday and into this week, Bloomberg said. Morgan Stanley MS reportedly coordinated with Musk and the other lenders in facilitating the clinching of the deal.

How The Financing Math Works: Musk has mobilized up to $13 billion in debt financing and $12.5 billion in margin loan commitment from Morgan Stanley, which leads the consortium of 11 other banks. Prominent among the banks that have given funding commitments are Mitsubishi UFJ Financial Group Inc MUFG, Bank of America Corp BAC, Barclays PLC BCS, BNP Paribas ADR BNPQY and Mizuho Financial Group Inc MFG.

Musk personally has committed to $21 billion in equity financing.

Morgan Stanley's role as the facilitator does not come as a surprise, given Musk's suggestion that the Wall Street firm would be the lead adviser in the proposed deal when he announced his interest in Twitter,

Twitter closed Friday's session 3.93% higher at $48.93, according to BenzingaPro data.

Photo: Created with an image from TED Conference on Flickr

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