Yesterday we told you that Elon Musk is demanding that Twitter sort three things out before going ahead with his takeover of the company. He wants to know how many fake accounts created by bots have illegal Twitter subscribers. The company says the number of fake users is less than 5% of the total, a figure heavily dismissed as false by the world’s richest man.
Musk is reportedly unhappy with the structure of his deal to buy Twitter
Musk is also said to be unhappy with the structure of the deal, which will reportedly include highly leveraged margin loans that will allow him to borrow up to 50% of the value of his Tesla shares. This is a very risky move by Musk because if Tesla stock were to fall in value to the point where the stock being used as collateral for a loan falls below a certain level, Musk would be forced to put extra money in his account or face. to deposit. sell his Twitter shares unilaterally.
Twitter’s board of directors approves Musk’s deal to buy the company
The third thing Musk wants to know is whether he has the support of Twitter shareholders. Not everyone likes him and he has played games with Tesla shareholders before. In August 2018, the multi-billionaire (with an estimated net worth of $213.9 billion) posted a tweet to his 22 million Twitter followers saying he could take Tesla private for $240 a share, a huge premium to Tesla’s stock. at the time.
Musk could take a financial hit if he’s called on to put in more money to meet a margin call
To reduce the risk of receiving a margin call, Elon Musk needs to make a change to how the deal is currently funded. This can be done by lowering the value of the deal. The quickest way this could be accomplished would be for Elon to announce that he was relinquishing the deal. Short-seller Hindenburg Research said last month: “If Elon Musk’s bid on Twitter were to disappear tomorrow, Twitter’s equity would drop by 50% from current levels. Consequently, we see significant risk of the deal getting lower.” repriced.”