Bloomberg reported late Wednesday that bankers could ask Elon Musk to use Tesla stock to back new Twitter margin loans.
Tesla (TSLA) – Get Free Report shares bumped higher Thursday amid reports that bankers are preparing to ask Elon Musk to pledge more of his stock in the clean-energy carmaker against loans linked to his $44 billion purchase of Twitter.
Bloomberg reported that Musk may need to provide margin loans to a group of bankers lead by Morgan Stanley as a way to replace the existing high-rate paper he arranged to fund the purchase earlier this year, given that debt servicing costs forecast for 2023 are likely to be much higher than the social media platform’s projected earnings.
Musk borrowed around $13 billion from the banking group that included a $3 billion chunk of unsecured debt that carries and annual interest rate of 11.75%, Bloomberg reported. The rest of the debt package is comprised of $6.5 billion in term loans and $3 billion in secured bonds.
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Musk, who financed part of the $33.5 billion equity commitment required to buy Twitter through his personal stock holdings, sold 19.5 million Tesla shares between November 4 and November 7, at prices ranging between $197.196 and $208.731 per share, across a total of twelve transactions that raised $3.95 billion.
Earlier this summer, Musk sold 7.92 million shares between August 5 and August 9, netting a total of around $6.9 billion, taking advantage of a 47% rally in Tesla shares from late May to August 5, when the first sale was made. He sold another $8.5 billion in April.
Musk told Tesla investors in October that he and his investor group were “obviously overpaying” for the social media group, with overall costs pegged at $46.5 billion.
Tesla shares were marked 0.71% higher in pre-market trading at $175.28 each, a move that would still leave the stock nursing a year-to-date decline of around 50%.
Short interest in Tesla shares remains elevated, as well, with bets around the group pegged at around $12 billion, according to recent data from S3 Partners, a figure that represents around 2.65% of the group’s outstanding shares.
