4 ms·
They switched equity for debt. This is normal when taking private a publicly traded business. Both the lender and the borrower know what they are doing better t
by aga98mtl 4y ago
They switched equity for debt. This is normal when taking private a publicly traded business. Both the lender and the borrower know what they are doing better than outside commenters who have never spent any time studying "going private" financing.
- pxmpxm 4y agoFinance 101 https://en.wikipedia.org/wiki/Modigliani%E2%80%93Miller_theorem https://en.wikipedia.org/wiki/Modigliani%E2%80%93Miller_theo...
- acdha 4y agoIt’s normal but paying considerably over the retail price is less common. Musk effectively gave TWTR shareholders a multibillion dollar bonus, which is why they sued to keep him from backing out of the deal.
- dragonwriter 4y ago“Its normal” doesn’t mean “it’s not an additional expense imposed on the post merger company.” Mergers where the loading of debt onto the company to finance the merger is a major cause of bankruptcy also aren’t that unusual. (For both public firms and firms taken private.)
- raydev 4y ago> Both the lender and the borrower know what they are doing better than outside commenters who have never spent any time studying "going private" financing It's pretty clear the borrower didn't know what they're doing when they made this deal. The borrower even tried to get the deal canceled (or maybe just renegotiate) by going through the court, and failed. The lenders moved forward because they know the borrower is good for it. And the borrower can afford to lose even more billions and still function. The borrower can afford to make mistakes of this size. I think you're confusing "this has been allowed to continue" with "all parties know what they're doing".