Musk's Twitter Deal Threats Put New Financing on Ice

Tesla Motors

-0.21%

Elon Musk's efforts to arrange new financing that will limit his cash contribution to his $44 billion acquisition of Twitter Inc have been put on hold because of the uncertainty surrounding the deal, people familiar with the matter said.

Musk has been threatening to walk away from the deal unless the social media company provides him with data to back up its estimate that false or spam accounts comprise less than 5% of its user base. This culminated in a letter from Musk's lawyers to Twitter on Monday warning he may walk away unless more information is forthcoming.

Musk is on the hook to pay $33.5 billion in cash to fund the deal after arranging debt financing to cover the rest. His liquidity is limited given that his wealth, which is pegged by Forbes at $218 billion, is largely tied to the shares of Tesla Inc, the electric car maker he leads.

Musk has been in discussions to arrange $2 billion to $3 billion in preferred equity financing from a group of private equity firms led by Apollo Global Management Inc that would further reduce his cash contribution, according to the sources. These conversations are now on hold until there is clarity about the future of the acquisition, one of the sources said.