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• Musk discussing with Apollo Global and Ares Management regarding possibilities of rolling their stake into the deal rather than cashing out
• Twitter founder and former CEO Jack Dorsey is examining whether he will roll his take
Elon Musk is in talks with investment firms and high net-worth individuals to take more financing for his $44 billion acquisition of Twitter Inc (NYSE: TWTR).
Investors are discussing with Musk about providing preferred equity financing for the acquisition of the social media company, Reuters reported on Monday, citing people familiar with the matter.
Preferred equity pays a fixed dividend, in the same way that a bond or a loan pays regular interest but would appreciate in line with the equity value.
Last month, the billionaire said he had secured $46.5 billion in debt and equity financing and committed committing $33.5 billion of his own money.
Multiple banks have also agreed to provide another $13 billion in debt secured against Twitter but hesitated at providing more debt due to the San Francisco-based microblogging platform's limited cash flow.
The $33.5 billion cash commitment includes $21 billion of equity and $12.5 billion of margin loans from Morgan Stanley against some of his Tesla Inc (NASDAQ: TSLA) shares.
Musk may use the new financing to trim the size of the margin loan based on the new investor interest in the deal financing, which will reduce his contribution to the deal and tie up less of his wealth, one of the sources told the news outlet.
Rearranging financing options
The report said that the billionaire is still deciding whether he will share some of his equity check for the deal with potential partners as Musk is not seeking to take on more debt for the Twitter deal.
Tesla boss has also started conversations with some of Twitter's major investors, including Apollo Global Management Inc (NYSE: APO), the single largest shareholder of the social media company and Ares Management Corp (NYSE: ARES), about the possibility of them rolling their stake into the deal rather than cashing out, one of the sources told Reuters.
Twitter founder and former CEO Jack Dorsey is also examining whether he will roll his take, the report said.
Last week, Musk revealed that he sold $8.5 billion in Tesla's shares, which is estimated will help the billionaire finance his planned takeover deal.
Picture Credit: MSNBC
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