Will Jack Dorsey Roll $1 Billion In Stock Into The New Twitter?

It seems ironic that just weeks ago many in the investment community were questioning Elon Musk’s ability to finance a bid for Twitter and even whether his offer was even serious. A 13D filing with the S.E.C. on 5/4 shows otherwise. After lining up $46.5 billion on 4/20, fully financing the transaction, he now has an additional $7.139 billion of funds committed from a who’s who list of investors .

This reduces the loan amount backed by Tesla
TSLA
shares held as collateral under a margin agreement from $12.5 billion to $6.25 billion.

Jack Dorsey, the co-founder of Twitter who sat on its board for years and was the only board member to speak out publicly in favor of Elon Musk buying the company is reportedly being courted by Musk to take a Board seat at the new and, hopefully improved, Twitter, as well as rolling his stock into the new Twitter. Jack Dorsey is expected to take home $978 million from his sale of Twitter shares once the transaction closes, but now is being asked to bet the farm on Musk.

Investors clearly liked the news, with Twitter one of the few stocks closing up on 5/5 (+$1.30 to $50.36, up 2.7%) as the DJIA fell more than 1,000 points (-3.1% to close at 32,998) while the NASDAQ
NDAQ
plummeted 647 points to close at 12,318, a hefty 5% decline)

The 13D noted that Musk is having, and will continue to have, discussions with certain existing holders of common stock (including Jack Dorsey), about their contributing their current holdings into the new Twitter in order to retain an equity stake.

Given that only one existing shareholder was listed in the 13D filing to be rolling his stock from the public company into the new privately held Twitter, expect that in the days and weeks ahead there will be more news about existing investors agreeing to roll their stock into the new Twitter. This would further reduce Musk’s financial commitment—he has already sold $8.5 billion in Tesla stock.

Of the Top 10 investors in the new round of financing, the largest is HRH Prince Alwaleed Bin Talal Bin Abdulaziz Aslsaud

Top 10 Investors In Most Recent Round Of Twitter Commitments

1 HRH Prince Alwaleed Bin Talal Bin Abdulaziz Aslsaud $1,894 million*

2 Lawrence J. Ellison Revocable Trust $1,000 million

3 Strauss Capital LLC $ 800 million

4 Vy Capital $ 700 million

5 Binance $ 500 million

6 AH Capital Management, L.L.C. (a16z) $ 400 million

7 Qatar Holding LLC $ 375 million

8 Aliya Capital Partners LLC $ 360 million

9 Fidelity Management & Research Company LLC $ 316 million

10 Brookfield $ 250 milliion

Total Top 10 $ 6,595 million

All Others $ 544 million

Total Commitments $7,139 million

*Consists of 34.949 million shares currently owned in Twitter, all others are cash commitments.

Source: 13D S.E.C. Filing.

That’s not to say that Musk doesn’t have his detractors. Bill Gates questioned Musk’s strategy at Twitter saying that social media must play a role in curbing the spread of misinformation. “He actually could make it worse,” Gates said at The Wall Street Journal’s CEO Council Summit on May 4.

Musk had recently posted that he would not invest in a philanthropic project backed by Gates due to the fact that he was shorting Tesla stock to the tune of $500 million.