Musk’s $8.5 Billion Tesla Stock Sales Make Math Behind Twitter Deal More Tricky

(Bloomberg) -- Elon Musk's sale of more than $8.5 billion of Tesla Inc. shares has made the math behind his $44 billion deal to buy Twitter Inc. a bit more tricky.

To acquire the social-media company, Musk has lined up $13 billion in bank financing, $12.5 billion in margin loans backed by Tesla shares and committed a further $21 billion himself.

Before his most recent share sales, the Tesla co-founder had about $3 billion in cash and investments to cover that $21 billion commitment, according to Bloomberg calculations. The recent disposals bring that total to about $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 he'll need to post Tesla shares worth $62.5 billion when it's 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 most recent proxy statement. If the electric carmaker's share price drops under $837 -- or about 7% below where it is currently -- he won't own enough stock to secure the loan. The shares traded as low as $821.70 as recently as Thursday.

The calculations assume he can't post shares related to Tesla options because the collateral needs to be “free of any lock-up or selling restrictions,” according to a filing. The options he owns convert to shares that can't be sold for five years.

Musk has said that he's trying to convince new or or existing equity investors to join him in the Twitter deal. If successful, that reduces the amount he needs to contribute.

Musk said in a tweet Thursday that he has “no further Tesla sales planned after today.” But he still has time to submit more regulatory filings if additional sales took place that day.