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I will be very surprised that Twitter's position was less than "you can have anything you want", precisely to avoid any complaint of non-cooperation. I do agre

I will be very surprised that Twitter's position was less than "you can have anything you want", precisely to avoid any complaint of non-cooperation. I do agree that the agreement's debt financing provisions may provide Musk an out -- "I wanted to close, but I couldn't get debt b/c you wouldn't cooperate". I'm a little surprised that Twitter agreed to any sort of financing provision, precisely because it seems to allow Musk to screw up his debt raising and then point to that as an out. But that is not a complaint in the letter, and becomes an argument about what lenders require for debt financing. Musk will have to show that lenders cared about this, and Twitter will have discovery to find evidence they didn't.

philipwhiuk 4y ago
> I will be very surprised that Twitter's position was less than "you can have anything you want", precisely to avoid any complaint of non-cooperation. Be very surprised, they capped the firehouse. From the filing: > Additionally, those APIs contained an artificial “cap” on the number of queries that Mr. Musk and his team can run regardless of the rate limit—an issue that initially prevented Mr. Musk and his advisors from completing an analysis of the data in any reasonable period of time. Mr. Musk raised this issue as soon as he became aware of it, in the first paragraph of the June 29 Letter: “we have just been informed by our data experts that Twitter has placed an artificial cap on the number of searches our experts can perform with this data, which is now preventing Mr. Musk and his team from doing their analysis.” That cap was not removed until July 6, after Mr. Musk demanded its removal for a second time.
spikels 4y ago
Twitter is demanding "specific performance" (i.e. complete the transaction) which is unrealistic given those financing provisions. No court can force all the other parties to close. No financing, no transaction.
- tptacek 4y ago
  He has the financing. He secured ~1/3rd of the funds based on committed LBO debt, ~1/3rd in margin loans against TSLA, and ~1/3rd in personal equity. Since then, he's been working to minimize the his personal exposure, but he can't just pretend not to own the TSLA stock he's borrowing against and selling to close the deal.
  - gabereiser 4y ago
    Financing has strings. I’m sure his partners want to make sure the mDAU is accurate as well. The entire value of Twitter depends on it.
    - tptacek 4y ago
      They can't want that, because it was a term Musk explicitly waived, publicly and notoriously, before he attempted to finance the deal. It was newsworthy, and well covered, that Musk secured the 13Bn of LBO debt in the first place.
      - gabereiser 4y ago
        What the media says (including musk) and what the term sheet says are two different things. If he mentioned mDAU could be fraudulent to anyone involved, they would be interested to hear what he had to say about it. I believe though that this is a move to reduce the risk and monies he has to pay to try to get a better deal ($30b perhaps?)
        admax88qqq 4y ago
        > they would be interested to hear what he had to say about it. They can be interested all they want, doesn't mean they can back out of a deal unless they can demonstrate fraud or gross negligence on behalf of Twitter.
        tptacek 4y ago
        They can't just demonstrate "fraud" or "gross negligence". They have to demonstrate a "material adverse effect", which, as Matt Levine shorthands it, is something on the order of a 40% drop in profitability --- not the stock price, but the fundamentals of the company. Not happening.
        dvt 4y ago
- admax88qqq 4y ago
  I think Twitter is working their way towards suing for damages. Sure you probably can't force the transaction to complete but you can sue for it and when the other parry demonstartes that they're not willing to complete a transaction they committed then you start suing for damages.
- voisin 4y ago
  Specific performance would apply to Musk as purchaser, not hypothetical lenders that aren’t party to the agreement. If he can’t find debt, then he would presumably have to liquidate more Tesla stock to pay the full price.
  - colinmhayes 4y ago
    He's already found the debt. His banks agreed to margin and twitter leveraged loans before the deal was even signed.
    - hef19898 4y ago
      So if Twitter wins Musk has to go through with his margin loans on Tesla stock. Ehich, at the current state of things, exposes to quite some risk of loosing tge ability to back up the loans with Tesla stock if share prices drop under a certain level. Maybe he just realized that risk and that's why he wants out.
      - HWR_14 4y ago
        Musk doesn't have to use his Tesla margin loan, and he's already claimed he wasn't going to. He has to get the money somehow, but he could just sell enough SpaceX if he felt like it.
- danielmarkbruce 4y ago
  I think 6.10f leaves him in trouble. No financing, yes transaction.
FormerBandmate 4y ago
It would be extremely hard to prove that Elon Musk, the richest man in the world who secured financing for the largest LBO ever in a week, was unable to secure financing because of a technicality in user data which played a key role in his stated rationale for the purchase. Unfortunately for Musk (lmao) and every Twitter employee (my heart actually goes out to them, with the current job market they’re in hell right now), I don’t think there’s any way out of this deal, especially when you look at past precedent like the LVMH-Tiffany’s and Simon-Taubman deals.
eftychis 4y ago
I would be surprised if not all lenders / investors did not ask for such data. Especially, after the first tweets from Musk. Musk did go around knocking on lots of doors to get money and I am not sure if he actually managed to get enough funds; I don't think personally it is a good deal without some internal fundamental data to prove otherwise. Of course, I am puzzled also that Twitter gave him a smidge of a way out.

philipwhiuk 4y ago

> I will be very surprised that Twitter's position was less than "you can have anything you want", precisely to avoid any complaint of non-cooperation. Be very surprised, they capped the firehouse. From the filing: > Additionally, those APIs contained an artificial “cap” on the number of queries that Mr. Musk and his team can run regardless of the rate limit—an issue that initially prevented Mr. Musk and his advisors from completing an analysis of the data in any reasonable period of time. Mr. Musk raised this issue as soon as he became aware of it, in the first paragraph of the June 29 Letter: “we have just been informed by our data experts that Twitter has placed an artificial cap on the number of searches our experts can perform with this data, which is now preventing Mr. Musk and his team from doing their analysis.” That cap was not removed until July 6, after Mr. Musk demanded its removal for a second time.

spikels 4y ago

Twitter is demanding "specific performance" (i.e. complete the transaction) which is unrealistic given those financing provisions. No court can force all the other parties to close. No financing, no transaction.

tptacek 4y ago
He has the financing. He secured ~1/3rd of the funds based on committed LBO debt, ~1/3rd in margin loans against TSLA, and ~1/3rd in personal equity. Since then, he's been working to minimize the his personal exposure, but he can't just pretend not to own the TSLA stock he's borrowing against and selling to close the deal.
- gabereiser 4y ago
  Financing has strings. I’m sure his partners want to make sure the mDAU is accurate as well. The entire value of Twitter depends on it.
  - tptacek 4y ago
    They can't want that, because it was a term Musk explicitly waived, publicly and notoriously, before he attempted to finance the deal. It was newsworthy, and well covered, that Musk secured the 13Bn of LBO debt in the first place.
    - gabereiser 4y ago
      What the media says (including musk) and what the term sheet says are two different things. If he mentioned mDAU could be fraudulent to anyone involved, they would be interested to hear what he had to say about it. I believe though that this is a move to reduce the risk and monies he has to pay to try to get a better deal ($30b perhaps?)
      - admax88qqq 4y ago
        > they would be interested to hear what he had to say about it. They can be interested all they want, doesn't mean they can back out of a deal unless they can demonstrate fraud or gross negligence on behalf of Twitter.
        tptacek 4y ago
        They can't just demonstrate "fraud" or "gross negligence". They have to demonstrate a "material adverse effect", which, as Matt Levine shorthands it, is something on the order of a 40% drop in profitability --- not the stock price, but the fundamentals of the company. Not happening.
        dvt 4y ago
admax88qqq 4y ago
I think Twitter is working their way towards suing for damages. Sure you probably can't force the transaction to complete but you can sue for it and when the other parry demonstartes that they're not willing to complete a transaction they committed then you start suing for damages.
voisin 4y ago
Specific performance would apply to Musk as purchaser, not hypothetical lenders that aren’t party to the agreement. If he can’t find debt, then he would presumably have to liquidate more Tesla stock to pay the full price.
- colinmhayes 4y ago
  He's already found the debt. His banks agreed to margin and twitter leveraged loans before the deal was even signed.
  - hef19898 4y ago
    So if Twitter wins Musk has to go through with his margin loans on Tesla stock. Ehich, at the current state of things, exposes to quite some risk of loosing tge ability to back up the loans with Tesla stock if share prices drop under a certain level. Maybe he just realized that risk and that's why he wants out.
    - HWR_14 4y ago
      Musk doesn't have to use his Tesla margin loan, and he's already claimed he wasn't going to. He has to get the money somehow, but he could just sell enough SpaceX if he felt like it.
danielmarkbruce 4y ago
I think 6.10f leaves him in trouble. No financing, yes transaction.

FormerBandmate 4y ago

It would be extremely hard to prove that Elon Musk, the richest man in the world who secured financing for the largest LBO ever in a week, was unable to secure financing because of a technicality in user data which played a key role in his stated rationale for the purchase. Unfortunately for Musk (lmao) and every Twitter employee (my heart actually goes out to them, with the current job market they’re in hell right now), I don’t think there’s any way out of this deal, especially when you look at past precedent like the LVMH-Tiffany’s and Simon-Taubman deals.

eftychis 4y ago

I would be surprised if not all lenders / investors did not ask for such data. Especially, after the first tweets from Musk. Musk did go around knocking on lots of doors to get money and I am not sure if he actually managed to get enough funds; I don't think personally it is a good deal without some internal fundamental data to prove otherwise. Of course, I am puzzled also that Twitter gave him a smidge of a way out.