Elon Musk Will Fund His Twitter Deal With Money From Countries That Suppress Free Speech
Richard Nieva
Last year, the government arrested seven people for using social media “to spread false news” during its elections. The country also has a history of suppressing free speech. In 2012, a Qatari poet was sentenced to 15 years in jail after reciting a poem critical of the government.
When the 2020 law was issued, Amnesty International called it “another bitter blow to freedom of expression in the country” and said it “is a blatant breach of international human rights law.” Musk has said he wants to ensure free speech on Twitter as long as it doesn't violate local law, so Qatar's financial involvement puts him in a potentially precarious position.
The financing and the conflicts of interest it creates underscore the difficulty Musk will face as he tries to implement his vision for Twitter. Musk said last month that he sees the platform as a digital town square. “My strong intuitive sense is that having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization,” he said.
Other backers announced Thursday include the billionaire Oracle cofounder Larry Ellison, who is investing $1 billion, and the cryptocurrency exchange Binance, which is putting in $500 million.
Richard Nieva
BUZZFEED NEWS
Thu, May 5, 2022
When Elon Musk announced his bid to buy Twitter last month, he said he wanted to make the social network a beacon for free speech. But as Musk scrambles to pull together funding for the $44 billion deal, the billionaire is also planning to accept financing for the deal from two countries that have historically restricted freedom of speech: Saudi Arabia and Qatar.
On Thursday, an SEC filing revealed new financiers for Musk’s takeover plan, which include Saudi Prince Alwaleed bin Talal and Qatar’s sovereign wealth fund. Both countries impose harsh censorship to quash dissent: A Qatari law states that spreading “false or malicious news” can land you in prison for five years, while in Saudi Arabia, critics of the government have faced arrest and even murder. Saudi Arabia ranks number 166 out of 180 on the World Press Freedom Index, while Qatar ranks number 119, according to Reporters Without Borders.
Twitter didn’t immediately respond to a request for comment on the financing.
Prince Alwaleed wrote on Twitter that the Kingdom Holding Company, an investment firm he controls, would roll over its current $1.9 billion investment in Twitter to join Musk on “this exciting journey.” The move comes after Alwaleed spurned Musk’s plan in a tweet last month, saying the Tesla CEO’s offer didn’t come close to the “intrinsic value” of the company. KHC has been a Twitter stakeholder since 2011.
Musk responded by asking about the size of the Kingdom's stake in Twitter, as well as the country’s views on “journalistic freedom of speech.” Saudi Arabia has been frequently criticized for censorship and human rights abuses, including the 2018 murder of Washington Post journalist Jamal Khashoggi. The Saudi government has denied any involvement by its leaders.
The prince didn’t publicly answer Musk’s questions, but in his tweet Thursday called Musk a “‘new’ friend” and “excellent leader.”
The sovereign wealth fund of Qatar will also contribute $375 million to Musk’s takeover deal. In 2020, the country issued a law that threatens to imprison “anyone who broadcasts, publishes, or republishes false or biased rumors, statements, or news, or inflammatory propaganda, domestically or abroad, with the intent to harm national interests, stir up public opinion, or infringe on the social system or the public system of the state..png)
Thu, May 5, 2022
When Elon Musk announced his bid to buy Twitter last month, he said he wanted to make the social network a beacon for free speech. But as Musk scrambles to pull together funding for the $44 billion deal, the billionaire is also planning to accept financing for the deal from two countries that have historically restricted freedom of speech: Saudi Arabia and Qatar.
On Thursday, an SEC filing revealed new financiers for Musk’s takeover plan, which include Saudi Prince Alwaleed bin Talal and Qatar’s sovereign wealth fund. Both countries impose harsh censorship to quash dissent: A Qatari law states that spreading “false or malicious news” can land you in prison for five years, while in Saudi Arabia, critics of the government have faced arrest and even murder. Saudi Arabia ranks number 166 out of 180 on the World Press Freedom Index, while Qatar ranks number 119, according to Reporters Without Borders.
Twitter didn’t immediately respond to a request for comment on the financing.
Prince Alwaleed wrote on Twitter that the Kingdom Holding Company, an investment firm he controls, would roll over its current $1.9 billion investment in Twitter to join Musk on “this exciting journey.” The move comes after Alwaleed spurned Musk’s plan in a tweet last month, saying the Tesla CEO’s offer didn’t come close to the “intrinsic value” of the company. KHC has been a Twitter stakeholder since 2011.
Musk responded by asking about the size of the Kingdom's stake in Twitter, as well as the country’s views on “journalistic freedom of speech.” Saudi Arabia has been frequently criticized for censorship and human rights abuses, including the 2018 murder of Washington Post journalist Jamal Khashoggi. The Saudi government has denied any involvement by its leaders.
The prince didn’t publicly answer Musk’s questions, but in his tweet Thursday called Musk a “‘new’ friend” and “excellent leader.”
The sovereign wealth fund of Qatar will also contribute $375 million to Musk’s takeover deal. In 2020, the country issued a law that threatens to imprison “anyone who broadcasts, publishes, or republishes false or biased rumors, statements, or news, or inflammatory propaganda, domestically or abroad, with the intent to harm national interests, stir up public opinion, or infringe on the social system or the public system of the state.
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Last year, the government arrested seven people for using social media “to spread false news” during its elections. The country also has a history of suppressing free speech. In 2012, a Qatari poet was sentenced to 15 years in jail after reciting a poem critical of the government.
When the 2020 law was issued, Amnesty International called it “another bitter blow to freedom of expression in the country” and said it “is a blatant breach of international human rights law.” Musk has said he wants to ensure free speech on Twitter as long as it doesn't violate local law, so Qatar's financial involvement puts him in a potentially precarious position.
The financing and the conflicts of interest it creates underscore the difficulty Musk will face as he tries to implement his vision for Twitter. Musk said last month that he sees the platform as a digital town square. “My strong intuitive sense is that having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization,” he said.
Other backers announced Thursday include the billionaire Oracle cofounder Larry Ellison, who is investing $1 billion, and the cryptocurrency exchange Binance, which is putting in $500 million.
Chibuike Oguh and Krystal Hu
Mon, May 2, 2022,
By Chibuike Oguh and Krystal Hu
(Reuters) -Elon Musk is in talks with large investment firms and high net-worth individuals about taking on more financing for his $44 billion acquisition of Twitter Inc and tying up less of his wealth in the deal, people familiar with the matter said.
Musk is the world's richest person, with Forbes estimating his net worth at about $245 billion. Yet most of his wealth is tied up in the shares of Tesla Inc, the electric car maker he leads. Last week, Musk disclosed he sold $8.5 billion worth of Tesla stock following his agreement to buy Twitter.
The new financing, which could come in the form of preferred or common equity, could reduce the $21 billion cash contribution that Musk has committed to the deal as well as a margin loan he secured against his Tesla shares, the sources said.
The banks that agreed last month to provide $13 billion in loans based on Twitter's business balked at offering more debt for Musk's acquisition given the San Francisco-based company's limited cash flow, Reuters reported last month.
Musk has also pledged some of his Tesla shares to banks to arrange a $12.5 billion margin loan to help fund the deal. He may seek to trim the size of the margin loan based on the new investor interest in the deal financing, one of the sources said.
Major investors such as private equity firms, hedge funds and high net-worth individuals are in talks with Musk about providing preferred equity financing for the acquisition, the sources said. Preferred equity would pay a fixed dividend from Twitter, in the same way that a bond or a loan pays regular interest but would appreciate in line with the equity value of the company.
Apollo Global Management Inc and Ares Management Corp are among the private equity firms that have been in talks about providing the financing, the sources added.
Musk is still deciding whether he will have partners team up with him in writing the equity check needed for the deal, the sources said. Musk is not seeking to take on more debt for the Twitter deal currently, the sources added.
Musk has also been in talks with some of Twitter's major shareholders about the possibility of them rolling their stake into the deal rather than cashing out, one of the sources said. Former Twitter Chief Executive and current board member Jack Dorsey is examining whether he will roll his take, one source added.
Large institutional investors, such as Fidelity, are also in talks about rolling over their stake, according to the source.
Musk has tweeted that he would try to keep as many investors in Twitter as possible as he takes the company private.
The sources requested anonymity because the matter is confidential. Musk, Dorsey, Fidelity, Apollo and Ares did not respond to requests for comment.
TESLA SHARES RALLY
Tesla shares ended trading on Monday in New York up 3.7% at $902.94. Wedbush Securities managing director Dan Ives said the news helped ease investors' concerns that Musk was relying too much on his Tesla shares for the Twitter deal financing.
"This is big if it materializes as we believe the Twitter deal has been a $100+ per share overhang on Tesla’s stock due to the Musk financing concerns," Ives tweeted.
Investors have been fretting over whether Musk will complete the Twitter deal given that he has backtracked in the past. In April, he decided at the last minute not to take up a seat on Twitter's board. In 2018, Musk tweeted that there was "funding secured" for a $72 billion deal to take Tesla private but did not move ahead with an offer.
Twitter shares ended trading up 0.2% at $49.14 in New York on Monday, closer to the $54.20 per share acquisition price, as investors interpreted the news on the new financing discussions as making it slightly more likely that the deal will close.
Musk would have to pay a $1 billion termination fee to Twitter if he walked away, and the social media company could also sue him to complete the deal.
Musk, who calls himself a free speech absolutist, has criticized Twitter's moderation policies. He wants Twitter's algorithm for prioritizing tweets to be public and objects to giving too much power on the service to corporations that advertise.
(Reporting by Chibuike Oguh in Los Angeles and Krystal Hu in New YorkEditing by Greg Roumeliotis and Lisa Shumaker)
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