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Can Elon Musk make Twitter’s numbers work?

Nevertheless, the interest rates on the loans reflect the risk that they may not be repaid. The banks do not hold the loans, but sell them to other investors in the market, so if Twitter can not pay the debt, Mr. Musk will either have to pay these investors, perhaps by selling more Tesla shares, or he could give up some of his ownership of Twitter, and dilute his stake.

Tesla had a market value of 902 billion dollars as of Friday, but the shares have fallen by almost 20 percent since Mr. Musk first revealed, in early April, that he had bought a large stake in Twitter. If Twitter’s economy goes south, forcing Mr. Musk to sell more Tesla shares to pay off Twitter̵[ads1]7;s debt or pledge more shares as collateral for his personal loan, it could put further pressure on Tesla’s share price. Mr. Musk does not receive a salary from Tesla, but is paid in stock that is released based on performance milestones that include the company’s share price.

Since Mr. Musk first revealed his stake, the technology-heavy Nasdaq index has fallen more than 10 percent, making his offer even more generous. “It’s a high price and your shareholders will love it,” Musk said in a letter to Twitter’s board. Although the stock of social media companies had traded higher than Mr. Musk’s offer just six months ago, it fell well below this price earlier this year and looked unlikely to return to these heights right away.

Mr. Musk has considered merging with investment firms in his attempt to buy Twitter, which will reduce the amount of money he would personally have to invest. He could still work with a company or other investors such as family offices to help raise money, according to two people with knowledge of the discussions.

Thoma Bravo, a technology-focused acquisition company, has expressed a willingness to provide some financing, but nothing has been decided yet. Apollo, an alternative asset manager, also looked at a possible deal where it would extend a loan on preferential terms.

If the deal math becomes distasteful for Mr. Musk, he has an out: a $ 1 billion breach fee. For a man with an estimated fortune well over $ 200 billion, it is a small price to pay.

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