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Musk & Twitter: The Second Act

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  1. #31

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    I suggest you read some more informed sources la

    https://www.ft.com/content/7fd36ef6-...d-172459110879



    Could Musk walk away for $1bn?
    The agreement includes a $1bn “reverse termination fee” that Musk would owe if he withdrew from the merger agreement. However, if all other closing conditions are met, and the only thing left is for Musk to show up at the closing with his $27.25bn in equity, Twitter can seek to make Musk close the deal. This legal concept, known as “specific performance”, has become a common feature in leveraged buyouts since the financial crisis.
    This has been in the public domain for weeks. The Twitter board intend to hold him to the purchase, as they should given their fiduciary responsibility to Twitter shareholders.

    Musk needs to win in court to be able to walk away.. Otherwise he’s on the hook to purchase the whole thing as he committed to do.

    Bret Taylor, tweeted in response that the board is "committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery."
    Most legal commentary I’ve seen says the seller usually wins these cases and nothing Musk has disclosed comes close to meeting the bar for materiality.
    ReleaseZeKraken and hullexile like this.

  2. #32

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    Elfant & Castle: Court may hold him to the deal despite the termination clause. Can't just walk away without a reason - his actual reason is that tech stocks like Twitter have cratered 50+% since april.
    Yes, it will be decided in court, he says he is terminating for cause (yes, we all know the real reason), because it's a famous deal will get a lot of scrutiny. Not sure what will happen but maybe gets out by paying more than a billion. Of course Twitter is suing for specific performance, kind of have to do that in this situation as he is trying to weasel out without paying anything...

    Lawyers still rejoicing at the fees they will make...
    Elefant&Castle likes this.

  3. #33

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    A chunk of the cash is coming from banks as debt lending. If they pull that, he won't have the cash to do the deal and it might fall through.

    If I was a bank, I would be pretty keen to find a way NOT to lent that cash given how things are going right now.

    Long and short, there is a good chance Musk could weasel out of it. Twitter knows this and *might* agree to a discount to get the deal through. That's the dance that is happening now.


  4. #34

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    Quote Originally Posted by GentleGeorge:
     
    If I was a bank, I would be pretty keen to find a way NOT to lent that cash given how things are going right now.
     
    Good job you have know idea about how banks work. You can be very sure they've run the numbers and happy to proceed. They will undoubtably offload some of the debt when the deal completes, and have Tesla stock as collateral on the margin loans.

    The bank consortium stand to make a shit-tonne of money from this deal, it is very much in their interests to see it go through.

  5. #35

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    Quote Originally Posted by TheBrit:
    Good job you have know idea about how banks work. You can be very sure they've run the numbers and happy to proceed.
    Luckily we are not going to have to wait long to find out

  6. #36

  7. #37

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  8. #38

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    Quote Originally Posted by TheBrit:
    Good job you have know idea about how banks work. You can be very sure they've run the numbers and happy to proceed. They will undoubtably offload some of the debt when the deal completes, and have Tesla stock as collateral on the margin loans.
    https://www.bloomberg.com/news/artic...al-falls-apart

    Banks had promised that the riskiest Twitter buyout debt -- $3 billion of unsecured bonds to be rated CCC, the lowest rung of junk -- would cost no more than about 11.75%. That compares to a market average of about 13.6% on comparably-rated bonds, up from 9.9% when the deal was announced, according to data compiled by Bloomberg. ...

    At a fixed 11.75% coupon, and assuming an eight-year maturity, banks selling the unsecured bonds today would have to offer a discounted price of about 91 cents on the dollar to reach an all-in yield of about 13.6%. That would result in a loss of between $150 million and $200 million, net of underwriting fees banks typically earn for selling unsecured debt.
    Maybe you can mansplain some more to me about how banks work?

  9. #39

  10. #40

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    Seems a few others hanging Musk out to dry
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