RBC and CIBC Helping to Finance Elon Musk’s $44 Billion Twitter Purchase
According to a report by The Globe and Mail, the Royal Bank of Canada and Canadian Imperial Bank of Commerce have joined the list of banks helping finance Elon Musk’s $44 bid to buy Twitter, recently made official as of Monday, adding a Canadian connection to the deal.
The two Canadian banks are putting $1.15 billion USD ($1.46 billion CAD) into the lowest-risk loan to Tesla and SpaceX founder, who has just entered into an agreement with Twitter to buy the company at $54.20 per share.
Musk has secured $25.5 billion borrowed from a dozen banks, led by lead financial advisor, Morgan Stanley, plus BofA Securities and Barclays.
The largest element of the Twitter deal is a $12.5 billion loan backed by a portion of Musk’s 17% stake in Tesla. As per the Globe:
RBC and CIBC are among 12 banks involved in this loan, according to a regulatory filing. RBC pledged US$750-million and CIBC put up US$400-million. The lead bank on the entire financing, Morgan Stanley, promised US$2-billion on this loan.
The package also includes an unsecured US$3-billion bridge loan – money borrowed with no collateral – and a US$6.5-billion seven-year term loan.
The Canadian banks’ funding is the lowest-cost debt in the Twitter financing package, and therefore the least risky loan.
“Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated,” said Musk in a statement. “I also want to make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spam bots, and authenticating all humans. Twitter has tremendous potential – I look forward to working with the company and the community of users to unlock it.”
Once the deal is expected to complete in 2022, Twitter will become a private company. It’s unclear if its current CEO Parag Agrawal will retain his position, but users can expect changes to come, including the highly-awaited ‘edit button’ for all.