(Bloomberg) — The banks underwriting the jumbo financing funding Twitter’s acquisition by Elon Musk have extended the period they will commit to backing the $44 billion buyout by six months, giving the billionaire more time to complete the transaction.
The commitment to provide a $13 billion debt package — if the acquisition goes through — will now last through April 25, 2023, according to a disclosure filed on Tuesday. It was originally scheduled to terminate on October 20.
The lenders committing to the package include Morgan Stanley, Bank of America Corp., Barclays Plc, MUFG Bank Ltd., BNP Paribas SA, Mizuho Financial Group Inc. and Societe Generale SA.
The same banks, along with five others, are also providing a margin loan. The $12.5 billion margin loan against Musk’s Tesla stock will be available until April 24, 2023, the disclosure said.
The extension will give the banks more time to offload most of the $13 billion package to institutional investors at a challenging moment in debt markets. Junk bond issuance has slowed considerably this year due to inflation, rising interest rates and a risk-off sentiment due to Russia’s invasion of Ukraine. One part of the market that the banks will almost certainly tap — leveraged loans — has fared better because they have floating rates that are attractive to investors amid rising interest rates. Still, sales have been subdued.
The banks have agreed to provide a $6.5 billion senior secured term loan facility, as well as two bridge loans: a senior secured bridge loan of up to $3 billion and an unsecured bridge loan of up to $3 billion. The commitments are expected to eventually be replaced with long-term financing from the leveraged loan and junk bond markets. The banks also provided a $500 million senior secured revolving credit facility.
Read more: Wall Street Banks Step Up to Finance Musk’s Pursuit of Twitter
Musk has also promised to provide $21 billion in equity to fund the acquisition. His deal to take the 16-year-old social networking platform private for $44 billion was unanimously approved by the company’s board and is expected to be completed later this year, subject to the approval of Twitter stockholders. The deal includes a provision that the billionaire is required to pay the company a fee if he were to walk away or the deal falls apart, Bloomberg reported.
(Updates throughout with more context.)
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