Banks held negotiations on refinancing with Elon Musk

Banks held negotiations on refinancing with Elon Musk

(Bloomberg) — A bank group spearheaded by Morgan Stanley held discussions with Elon Musk and his team about refinancing a roughly $12.5 billion debt package that supported the tech billionaire’s take-private of the social media platform X, according to people with knowledge of the matter.

In talks that faltered earlier this year, certain banks and Musk’s team explored options to strengthen the debt package, said the people, who asked not to be identified discussing confidential talks. The parties discussed options that could reduce the cost of the debt and make it less risky for banks to hold, one of the people said.

A group of seven banks, led by the New York-based lender, has been stuck holding the debt since 2022. They’ve repeatedly renewed an agreement not to individually offload their holdings, with the goal of coordinating a sale when X — formerly known as Twitter — is on firmer financial footing with stable advertising revenues, subscription growth and further traction from a planned peer-to-peer payments platform, one of the people said.

Representatives for X and Morgan Stanley declined to comment.

Morgan Stanley was the largest lender on the deal, providing just over a quarter of the debt package. That contributed to $876 million of mark-to-market losses the bank took in 2022 on corporate loans it was looking to sell. The firm said in its annual regulatory filing last month that such losses were smaller in 2023, without providing a figure.

Fidelity, which received a stake in X after helping Musk complete his $44 billion purchase, has marked down the value of its position by 72% since the takeover.

Musk, who counts X as one of several business ventures, has recently been focusing on reincorporating companies including SpaceX and Neuralink Corp. to Texas and Nevada, respectively, after a Delaware judge in January voided his almost $56 billion pay package at Tesla Inc.

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