Due to High-Interest Burden... Musk Considers Stock-Backed Loan Using Twitter Shares

Discussing Alternatives to 4 Trillion Won Margin Loans with Lending Banks

[Image source=AP Yonhap News]

[Asia Economy Reporter Yujin Cho] Elon Musk is considering taking out a loan using Tesla shares as collateral to reduce the high-interest debt incurred during the Twitter acquisition process.

On the 8th (local time), according to Bloomberg News, global investment banks that lent funds for Musk's Twitter acquisition are discussing replacing the $3 billion (approximately 4 trillion KRW) 11.75% high-interest unsecured loan in Twitter's name with a margin loan secured by Tesla shares.

An anonymous source said, "This is one of the options Musk's financial advisors are discussing to ease the burden of the $13 billion high-interest debt incurred during the Twitter acquisition process."

The interest rate for the margin loan has not yet been determined. Sources said that converting some of Twitter's debt into a Tesla stock-secured loan is a preliminary discussion and no decision has been made.

To raise the $44 billion acquisition fund for Twitter, Musk borrowed $13 billion in debt under Twitter's name from global investment banks including Morgan Stanley, Bank of America, Barclays, BNP Paribas, Mitsubishi UFJ Financial Group (MUFG), and Soci?t? G?n?rale.

Accordingly, Twitter's estimated annual interest payment is about $1.2 billion. The remaining funds, excluding the $13 billion, were covered through the sale of Tesla shares and attracting investors.

The news agency assessed that although it is unclear how much progress this discussion will make or how details such as the interest rate will be decided, the fact that both parties are considering such an option just six months after the Twitter acquisition shows how flawed this decision was.

Some foreign media have diagnosed that converting part of Twitter's debt into a Tesla stock-secured loan would be an additional negative factor for Tesla's stock price.

Tesla's stock price has already plummeted more than 56% this year alone due to Twitter risks. On this day, Tesla's stock, listed on the U.S. Nasdaq market, repeatedly fell during trading and at one point dropped below $170.

Bloomberg stated, "Tesla's stock price decline became pronounced after Musk acquired Twitter," and diagnosed that Tesla investors are concerned that Musk is focusing more on Twitter management.

The automotive specialized media Electric analyzed, "Musk has already sold over $10 billion worth of Tesla shares, putting a lot of pressure on shareholders," and "a Tesla stock-secured loan will put more pressure on Tesla's stock price decline."

Furthermore, it is anticipated that if Musk's collateral loan is made while Tesla's board is considering a multi-billion dollar share buyback to boost the stock price, it could lead to ethical issues.

This content was produced with the assistance of AI translation services.