AI Summary:
- Tesla CEO Musk's banking team is examining financing solutions to reduce high interest costs.
- Musk has accumulated about $18 billion in debt during the acquisition of X and the establishment of xAI.
- Morgan Stanley is expected to lead this financing plan to support a potential IPO.
According to sources, after the completion of the merger between SpaceX and xAI, Tesla (TSLA.US) CEO Musk's banking team is working on a potential financing solution aimed at reducing the high interest costs accumulated by the billionaire in recent years, and paving the way for a potential initial public offering (IPO) that may be launched later this year.
Insiders say that Musk has accumulated nearly $18 billion in debt during the acquisition of the social media platform X (formerly Twitter) and the establishment of the artificial intelligence company xAI. Although the relevant financing arrangements have not yet been finalized, the new plan is expected to help reduce the costly debt burden before the IPO.
Insiders say that Morgan Stanley is expected to play a leading role in this financing plan. The bank previously led Musk's acquisition financing of Twitter in 2022 and was responsible for the subsequent debt issuance of xAI. Additionally, Morgan Stanley is also one of the lead underwriters proposed for the SpaceX IPO, with other potential underwriters including Goldman Sachs, Bank of America, and JPMorgan. However, the relevant banks have all declined to comment, and the specific arrangements for the IPO may still change.
Musk's performance in the debt market has been a mixed bag. His acquisition of Twitter relies on a financing plan with a total scale of up to $12.5 billion, which still burdens the company heavily, requiring monthly interest payments of tens of millions of dollars. At the beginning of the acquisition, concerns about Musk's content moderation strategy impacting advertising revenue forced relevant banks to keep the debt on their balance sheets, leading to cautious investor attitudes.
It wasn't until April last year that the banks finally cleared the remaining acquisition debt, selling the last bond worth approximately $1.23 billion at a fixed interest rate of 9.5% and a face value of 98 cents. Besides Morgan Stanley, X's creditors also include Bank of America, Barclays, MUFG, BNP Paribas, Mizuho Financial Group, and Société Générale.
In March last year, Musk merged the social media platform with xAI, valuing X at $45 billion (including debt). Subsequently, this artificial intelligence startup added about $5 billion in debt. Due to concerns about the company's insufficient profitability and rapid cash consumption, creditors once required xAI to avoid similar large-scale debt financing again.
Source: Zhitong Finance This article is copyrighted by the original author/institution.
The current content only represents the author's views and is unrelated to this platform's position. The content is for investment reference only and does not constitute any investment advice. If you have any questions or suggestions regarding the content services provided by this platform, please contact us.