Elon Musk will owe Twitter $ 1 billion if he can not secure funding

In this photo illustration, Elon Musk Twitter is shown on a smartphone screen with the Twitter logo in the background in Chania, Crete, Greece on April 23, 2022.

Nikolas Kokovlis | Nurphoto | Getty Images

Elon Musk, CEO of SpaceX and Tesla, may be required to pay Twitter a $ 1 billion termination fee in some circumstances, such as if Musk fails to secure sufficient debt financing to complete its $ 44 billion deal to buy the company, according to a new SEC application.

From the application (parent refers to the special company Musk created to buy Twitter):

As described above, if the conditions of the parent company and the Buyer’s obligations to complete the Merger are met and the parent company fails to complete the Merger as required under the Merger Agreement, including because the equity, debt and / or margin loan financing is not financed, Parent will be obligated to pay Twitter a $ 1.0 billion termination fee.

On the other hand, Twitter will owe Elon Musk a $ 1 billion break-up fee if it falls through because it found a competing offer, or if shareholders reject the deal under the same application.

Musk offered to buy the company for $ 54.20 per share and take it privately. He said Twitter should function as a digital public space that is tolerant of different views.

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