By Tom Hals
WILMINGTON, Del. (Reuters) -Elon Musk said banks are working to finance his $44 billion deal for Twitter Inc and asked a judge to halt the social media company’s lawsuit, which Twitter swiftly rejected and said the case should head to trial this month, according to Thursday court filings.
The world’s richest person said this week he would purchase Twitter at the price he agreed in April, $54.20 per share, but conditioned the deal on receiving debt financing.
Banks are working cooperatively to fund the deal, which is expected to close on or around Oct. 28, the court filing said.
“As a result there is no need for an expedited trial to order defendants to do what they are already doing and this action is now moot,” said the filing.
Twitter shot back within hours. The proposal was “an invitation to further mischief and delay,” according to Twitter’s court filing.
“Now, on the eve of trial, defendants declare they intend to close after all. ‘Trust us,’ they say, ‘we mean it this time,’ and so they ask to be relieved from a reckoning on the merits,” Twitter said in the filing.
A five-day trial is scheduled to begin on Oct. 17 and Musk was supposed to be deposed on Thursday, although the parties mutually agreed to postpone his interview, sources told Reuters.
Musk said lawyers representing the debt financing parties have reassured him that they are prepared to honor their obligations. Continuing the litigation would require a trial and appeals and could drag out payment to Twitter’s shareholders by months, the filing said.
“Twitter will not take yes for an answer. Astonishingly, they have insisted on proceeding with this litigation, recklessly putting the deal at risk and gambling with their stockholders’ interests,” the filing said.
Twitter said Musk should be arranging to close next week. The company said a corporate representative for a lending bank testified on Thursday that Musk has yet to send them a borrowing notice and has not communicated that he intends to close.
Twitter also said the bank representative testified that the work to finalize the debt financing could have occurred in July but did not because Musk claimed he had terminated the deal.
Musk, who is also chief executive of Tesla Inc, asked for an immediate hearing, according to a letter to Chancellor Kathaleen McCormick of Delaware’s Court of Chancery.
Twitter shares ended the day down 3.7% at $49.39 on the New York Stock Exchange.
Since Musk made his offer on Monday, talks have dragged on longer than some initially expected, according to sources close to the litigation.
Wedbush analyst Dan Ives said it “would be an understatement” to say talks between both sides are going poorly. “There is a lot of mistrust for obvious reasons,” he said.
Major banks that committed to fund $12.5 billion, or about 28% of the deal, could be facing hefty losses as the swift pace of interest rate hikes has ratcheted up market volatility and dampened appetite for leveraged financing.
“There’s still some uncertainty based on whether or not Elon can find the actual financing to do the deal,” said Randy Frederick, managing director of trading and derivatives for the Schwab Center.
Musk has raised $15.4 billion by selling Tesla shares this year and is leaning on large investors for a chunk of the financing, leading to speculation over whether he will sell more of the electric-vehicle maker’s stock to fund the deal.
“Financing will eventually end up going through one way or another. It is just a point of negotiating terms at this stage,” said Robert Gilliland, managing director at Concenture Wealth Management.
(Reporting by Tom Hals in Wilmington, Del.Additional reporting by Sheila Dang in Dallas, and Medha Singh, Bansari Mayur Kamdar and Amruta Khandekar in BengaluruEditing by Nick Zieminski and Matthew Lewis)
