When banks led by Morgan Stanley agreed in April to help finance Elon Musk’s purchase of Twitter, they were eager to aid an important client, the richest person in the world. Now neither Mr Musk nor the banks have an obvious way to wriggle out of it.
Lenders that also include Bank of America, Barclays and Mitsubishi UFJ Financial Group committed to provide $13 billion of debt financing for the deal. Their losses would amount to $500 million or more if the debt were to be sold now, according to Bloomberg calculations.
They agreed to fund the purchase whether or not they were able to offload the debt to outside investors, according to public documents and lawyers who have looked at them.
“I think that those banks would like to get out of it, I think the deal makes less sense for them now, and that the debt will be harder to syndicate to investors,” said Howard Fischer, a partner at law firm Moses Singer.
But Mr Fischer, a former senior trial counsel at the Securities and Exchange Commission who isn’t involved in Twitter, said there’s no legal basis for them to back out.
Junk bond and leveraged loan yields have surged since April, meaning that banks will lose money from having agreed to provide financing at lower yields than the market will accept now.
Any pain the banks bear from this deal comes as lenders have already sustained billions of dollars of writedowns and losses this year after central banks worldwide have started hiking rates to tame inflation.
Even if the banks could find buyers for Twitter debt in the market now, which is far from certain, selling bonds and loans tied to the deal probably wouldn’t be possible before the buyout closes.
Banks have a pipeline of about $50bn of debt financing they’ve committed to provide in the coming months, according to Deutsche Bank estimates. While usually banks would sell bonds and loans to fund those deals, investors are less eager to buy now than they were towards the beginning of the year, and offloading this debt will be hard.
That’s forcing banks to provide the financing themselves on a number of deals, a strain on their earnings and capital requirements. For example, lenders including Bank of America and Barclays expect to have to fund $8.35bn of debt for the leveraged buyout of Nielsen Holdings next week, Bloomberg reported on Tuesday.
Representatives for Morgan Stanley, Bank of America, Barclays, MUFG and Twitter declined to comment. A representative for Mr Musk did not immediately respond to a request for comment.
Banks may not be able to back out of the Twitter deal, but Mr Musk has been trying to. Twitter said on Thursday that it's dubious of the billionaire’s promises to close on the transaction.
The company said that a banker involved in the debt financing testified earlier on Thursday that Mr Musk had yet to send them a borrowing notice, and had otherwise not communicated to them that he intended to close the deal.
The lack of a borrowing notice on its own isn’t necessarily a problem. Usually that document comes towards the end of the process of closing on a purchase, said David Wicklund, a partner at Vinson & Elkins who focuses on complex acquisition and leveraged financing.
It’s often submitted to banks two or three days before closing, making it one of the last items to be finished.
But leading up to the closing of a big acquisition typically involves a blizzard of paperwork that has to be negotiated between both parties. There may be 50 to 80 documents that get discussed, Mr Wicklund said.
A Delaware judge said on Thursday that if the transaction isn’t done by October 28, she will set new dates in November for the lawsuit between Twitter and Mr Musk. That date comes from a filing from Mr Musk’s team that said the banks needed until then to provide the debt funding.
Those banks would like to get out of it, I think the deal makes less sense for them now, and that the debt will be harder to syndicate to investors
Howard Fischer,
partner at Moses Singer
On Monday, Mr Musk sent Twitter a letter saying he would go through with his acquisition “pending receipt of the proceeds of the debt financing". That made it seem like there was some doubt as to whether the banks would provide their promised financing, which became a sticking point in negotiations between the company and the billionaire.
But in a court document on Thursday, Mr Musk’s team said that lawyers for the banks “has advised that each of their clients is prepared to honour its obligations".
The banking group originally planned to sell $6.5bn of leveraged loans to investors, along with $6bn of junk bonds split evenly between secured and unsecured notes. They are also providing $500m of a type of loan called a revolving credit facility that they would typically plan to hold themselves.
Of the more than $500m of losses that the banks are estimated to have on the Twitter debt, up to about $400m stems from the riskiest portion, the unsecured bonds, which have a maximum interest rate for the company of about 11.75 per cent, Bloomberg reported earlier this year. The losses exclude fees the banks would usually earn on the transaction.
The rest of the losses are estimated based on where the maximum interest rates would have been determined for the loan and secured bond when compared to the unsecured portion. The expected loss could ultimately be higher or lower.
The banking group is expected to give the cash to Twitter and become a lender to the soon-to-be highly-indebted social media giant. Morgan Stanley would hold onto the most at about $3.5bn of debt, based on the debt commitment letter.
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Ferrari 12Cilindri specs
Engine: naturally aspirated 6.5-liter V12
Power: 819hp
Torque: 678Nm at 7,250rpm
Price: From Dh1,700,000
Available: Now
The five pillars of Islam
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Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
Tearful appearance
Chancellor Rachel Reeves set markets on edge as she appeared visibly distraught in parliament on Wednesday.
Legislative setbacks for the government have blown a new hole in the budgetary calculations at a time when the deficit is stubbornly large and the economy is struggling to grow.
She appeared with Keir Starmer on Thursday and the pair embraced, but he had failed to give her his backing as she cried a day earlier.
A spokesman said her upset demeanour was due to a personal matter.
ALRAWABI%20SCHOOL%20FOR%20GIRLS
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Where can I submit a sample?
Volunteers can now submit DNA samples at a number of centres across Abu Dhabi. The programme is open to all ages.
Collection centres in Abu Dhabi include:
- Abu Dhabi National Exhibition Centre (ADNEC)
- Biogenix Labs in Masdar City
- Al Towayya in Al Ain
- NMC Royal Hospital in Khalifa City
- Bareen International Hospital
- NMC Specialty Hospital, Al Ain
- NMC Royal Medical Centre - Abu Dhabi
- NMC Royal Women’s Hospital.
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
ELIO
Starring: Yonas Kibreab, Zoe Saldana, Brad Garrett
Directors: Madeline Sharafian, Domee Shi, Adrian Molina
Rating: 4/5
What is a black hole?
1. Black holes are objects whose gravity is so strong not even light can escape their pull
2. They can be created when massive stars collapse under their own weight
3. Large black holes can also be formed when smaller ones collide and merge
4. The biggest black holes lurk at the centre of many galaxies, including our own
5. Astronomers believe that when the universe was very young, black holes affected how galaxies formed
The%20Little%20Mermaid%20
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BMW%20M4%20Competition
%3Cp%3E%3Cstrong%3EEngine%3A%20%3C%2Fstrong%3E3.0%20twin-turbo%20inline%20six-cylinder%0D%3Cbr%3E%3Cstrong%3ETransmission%3A%3C%2Fstrong%3E%20eight-speed%0D%3Cbr%3E%3Cstrong%3EPower%3A%20%3C%2Fstrong%3E503hp%0D%3Cbr%3E%3Cstrong%3ETorque%3A%3C%2Fstrong%3E%20600Nm%0D%3Cbr%3E%3Cstrong%3EPrice%3A%3C%2Fstrong%3E%20from%20Dh617%2C600%0D%3Cbr%3E%3Cstrong%3EOn%20sale%3A%3C%2Fstrong%3E%20Now%0D%3C%2Fp%3E%0A
Gothia Cup 2025
4,872 matches
1,942 teams
116 pitches
76 nations
26 UAE teams
15 Lebanese teams
2 Kuwaiti teams
LILO & STITCH
Starring: Sydney Elizebeth Agudong, Maia Kealoha, Chris Sanders
Director: Dean Fleischer Camp
Rating: 4.5/5
UAE currency: the story behind the money in your pockets
The Old Slave and the Mastiff
Patrick Chamoiseau
Translated from the French and Creole by Linda Coverdale
UAE currency: the story behind the money in your pockets
More from Rashmee Roshan Lall
Cases of coronavirus in the GCC as of March 15
Saudi Arabia – 103 infected, 0 dead, 1 recovered
UAE – 86 infected, 0 dead, 23 recovered
Bahrain – 210 infected, 0 dead, 44 recovered
Kuwait – 104 infected, 0 dead, 5 recovered
Qatar – 337 infected, 0 dead, 4 recovered
Oman – 19 infected, 0 dead, 9 recovered
The%20specs
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Champions parade (UAE timings)
7pm Gates open
8pm Deansgate stage showing starts
9pm Parade starts at Manchester Cathedral
9.45pm Parade ends at Peter Street
10pm City players on stage
11pm event ends
The biog
Hobbies: Writing and running
Favourite sport: beach volleyball
Favourite holiday destinations: Turkey and Puerto Rico
The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
The biog
Family: He is the youngest of five brothers, of whom two are dentists.
Celebrities he worked on: Fabio Canavaro, Lojain Omran, RedOne, Saber Al Rabai.
Where he works: Liberty Dental Clinic
match info
Maratha Arabians 138-2
C Lynn 91*, A Lyth 20, B Laughlin 1-15
Team Abu Dhabi 114-3
L Wright 40*, L Malinga 0-13, M McClenaghan 1-17
Maratha Arabians won by 24 runs
MATCH INFO
Asian Champions League, last 16, first leg:
Al Ain 2 Al Duhail 4
Second leg:
Tuesday, Abdullah bin Khalifa Stadium, Doha. Kick off 7.30pm
England squad
Goalkeepers: Jordan Pickford, Nick Pope, Aaron Ramsdale
Defenders: Trent Alexander-Arnold, Conor Coady, Marc Guehi, Reece James, Harry Maguire, Tyrone Mings, Luke Shaw, John Stones, Ben White
Midfielders: Jude Bellingham, Conor Gallagher, Mason Mount, Jordan Henderson, Declan Rice, James Ward-Prowse
Forwards: Tammy Abraham, Phil Foden, Jack Grealish, Harry Kane, Bukayo Saka, Emile Smith Rowe, Raheem Sterling
COMPANY%20PROFILE
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Tips to keep your car cool
- Place a sun reflector in your windshield when not driving
- Park in shaded or covered areas
- Add tint to windows
- Wrap your car to change the exterior colour
- Pick light interiors - choose colours such as beige and cream for seats and dashboard furniture
- Avoid leather interiors as these absorb more heat
Killing of Qassem Suleimani
Two-step truce
The UN-brokered ceasefire deal for Hodeidah will be implemented in two stages, with the first to be completed before the New Year begins, according to the Arab Coalition supporting the Yemeni government.
By midnight on December 31, the Houthi rebels will have to withdraw from the ports of Hodeidah, Ras Issa and Al Saqef, coalition officials told The National.
The second stage will be the complete withdrawal of all pro-government forces and rebels from Hodeidah city, to be completed by midnight on January 7.
The process is to be overseen by a Redeployment Co-ordination Committee (RCC) comprising UN monitors and representatives of the government and the rebels.
The agreement also calls the deployment of UN-supervised neutral forces in the city and the establishment of humanitarian corridors to ensure distribution of aid across the country.
From Zero
Artist: Linkin Park
Label: Warner Records
Number of tracks: 11
Rating: 4/5
The five pillars of Islam
1. Fasting
2. Prayer
3. Hajj
4. Shahada
5. Zakat
