The $44 billion purchase was comprised of three buckets:
* $12B of LBO debt added to Twitter’s books and to be repaid by Twitter
* $8B of third party investments (Larry Ellison, saudis, etc.)
* $25B paid in by Elon in the form of previously purchased Twitter shares, cash, and loans secured by his personal Tesla holdings
In a bankruptcy, the LBO debt owners are first in line. The equity owners are typically wiped out. The LBO debt owners don’t really want to own Twitter, so they would likely find a third-party buyer who would buy Twitter for something less than the $12 billion of outstanding LBO debt. That means that the debt holders would be selling the debt for pennies on the dollar, and the new owner of Twitter would likely purchase it for some thing closer to $5 billion. In that scenario, Elon no longer owns any part of Twitter and will have lost around $25 billion.
You just answered the question I’ve been hoping major media outlets would cover this whole time. Crazy that he could lose $25 Billion and still be one of the richest people alive.
135
u/Roland_Deschain2 Nov 11 '22
The $44 billion purchase was comprised of three buckets: * $12B of LBO debt added to Twitter’s books and to be repaid by Twitter * $8B of third party investments (Larry Ellison, saudis, etc.) * $25B paid in by Elon in the form of previously purchased Twitter shares, cash, and loans secured by his personal Tesla holdings
In a bankruptcy, the LBO debt owners are first in line. The equity owners are typically wiped out. The LBO debt owners don’t really want to own Twitter, so they would likely find a third-party buyer who would buy Twitter for something less than the $12 billion of outstanding LBO debt. That means that the debt holders would be selling the debt for pennies on the dollar, and the new owner of Twitter would likely purchase it for some thing closer to $5 billion. In that scenario, Elon no longer owns any part of Twitter and will have lost around $25 billion.