Musk’s $8.5 billion Tesla stock sales make math behind Twitter deal trickier

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(Bloomberg) – Elon Musk’s sale of more than $8.5 billion of Tesla Inc. stock has made the math behind his $44 billion deal to buy Twitter Inc. a little trickier.

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To acquire the social media company, Musk lined up $13 billion in bank financing, $12.5 billion in margin loans secured by Tesla stock, and committed an additional $21 billion himself.

Read more: Musk sells $8.5 billion worth of Tesla stock after Twitter deal

Prior to his latest stock sales, the Tesla co-founder had about $3 billion in cash and investments to cover that $21 billion commitment, according to Bloomberg calculations. Recent divestments bring that total to around $11.5 billion.

But as a result of the trades, Musk has fewer shares to cover his margin loan, which has an initial loan-to-value ratio of 20%. That means it will have to release Tesla stock worth $62.5 billion when funded.

He now has 163 million shares remaining worth about $146 billion, though more than half are already pledged to secure existing personal debt, according to Tesla’s latest proxy statement. If the electric car maker’s stock price drops below $837 — about 7% below its current level — it won’t own enough stock to secure the loan. Shares traded as low as $821.70 as late as Thursday.

The calculations assume he can’t post stock related to Tesla options because the collateral must be “free of any blocking or selling restrictions,” according to a filing. The options he holds are converted into shares that cannot be sold for five years.

Musk said he was trying to convince new or existing equity investors to join him in the deal on Twitter. If successful, this reduces the amount he must contribute.

Musk said in a tweet on Thursday that he had “no further Tesla sales scheduled after today.” But he still has time to submit more regulatory documents if additional sales occurred that day.

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