Wall Street firms got stuck with US$13 billion of debt that Musk heaped on X during his surprise bid to take it private in 2022
The loan is being priced at 97 cents on the US dollar, the people said, representing a smaller discount to par than initially expected — a move that all but guarantees no losses for the banks from the largest portion of X-related borrowings. The banks already sold US$1 billion worth of the term loan earlier this month as a way to test investor appetite.
A spokesperson for Morgan Stanley declined to comment. X didn’t immediately respond to a request for comment.
The Wall Street firms got stuck with US$13 billion of debt that Musk heaped on X during his surprise bid to take it private in 2022. While banks typically try to resell debt they commit to fund an acquisition quickly, investors balked in this case after Musk upended X’s business, laid off staff and sparked a steep revenue decline.
Investors are now returning, drawn to the prospect of Musk-linked businesses benefiting from his relationship with President Donald Trump. The billionaire businessman used his ownership of X and his prominent perch on the platform to push for Trump’s return to the White House and now has established himself as a key adviser to the president. His growing reach across Washington has already proved to be a lightning rod, setting off criticism from Democrats warning of overreach.
When the acquisition closed, banks got stuck with three tranches of debt totalling US$13 billion. The largest portion was a US$6.5 billion term loan, meant to be sold to investors, with the rest divided up into secured and unsecured junk bonds.The banks will still have exposure to the latter portion, which may be harder to sell close to face value because it doesn’t offer the same level of creditor protections.
To bolster enthusiasm for the offering, Morgan Stanley shared new financials for X and hosted a meeting with some of the company’s top executives at the bank’s office in Manhattan.
—With assistance from Carmen Arroyo.