Elon Musk’s decision this week to proceed with his Twitter purchase – after months of trying to wriggle out of business – did not automatically halt his upcoming trial, the judge responsible for the case said today.
That suggests Musk’s filing of Twitter on Oct. 6 could go ahead as planned.
In a letter to the social network, released via an SEC filing yesterday, the Tesla tycoon said he would buy Twitter after all, provided he had the debt financing to fund the acquisition and that Twitter’s lawsuit against him in a Delaware court was immediately discontinued.
Twitter is suing Musk to force him to fulfill his promise earlier this year to buy Twitter for $54.20 a share — a $44 billion package — or pay a $1 billion exit fee if he walks away. Musk has tried not to do either, citing a number of excuses for ending the deal, including not believing Twitter’s user counts.
However, this week he signaled that he would still stick to the original acquisition plan.
This decision follows Twitter obtaining Musk’s private text messages through discovery and publishing them in court filings — messages that revealed the convulsive machinations of the billionaire’s friends and him to fund the Twitter acquisition. Stopping any further such disclosures and avoiding impeachment may have prompted Musk to put the deal back on the table and call for the lawsuit to be dropped.
But Chancellor Kathaleen McCormick, the judge on the lawsuit, ruled [PDF] Wednesday that neither party in the case actually filed the paperwork to suspend the case. Twitter hasn’t asked for a stay, neither has Musk, and his letter to the social network doesn’t count.
“I therefore continue to urge our trial, which is scheduled to begin on October 17,” said Chancellor McCormick.
It also means the SpaceX supremo’s testimony — in which he’ll be grilled under oath as a witness in the case by Twitter’s attorneys — is set to begin tomorrow, October 6. Musk has already postponed it once.
McCormick’s letter makes it clear that she believes he had something to do with the text messages Twitter requested and never received during the discovery. It’s feared that Musk at one point used a feature in the Signal messaging app to automatically delete some of his texts, which can now not be easily recovered, if at all.
As a result, Twitter is demanding a negative conclusion against him, which is a form of legal reasoning used to argue that it is reasonable to conclude that it was harmful for a defendant to destroy evidence he was asked to produce.
“If defendants have deleted documents after they were required to retain them, a remedy is appropriate, but the appropriate remedy is unclear to me at this time. I reserve my decision … until the post-trial briefing,” McCormick said.
Anyone glad the deal is back on?
It’s unclear what Musk was ultimately getting at with the sudden reversal of his months-long struggle to get out of his deal to buy Twitter. A filing on record, continued checking of his private messages, and today’s news that he faces possible penalties for withholding records can be on his mind.
Unfortunately for the banks, which need to fund $12.5 billion of the $44 billion needed to close the deal, Musk’s decision could not have come at a worse time, Reuters reports.
According to the news agency, the banks financing the takeover will try to resell the debt incurred in this takeover as soon as possible. But with a war in Ukraine, rising interest rates and looming recession fears, no one is ready to buy risky leveraged debt, Reuters said.
Morgan Stanley, Bank of America, Barclays and several international banks are facing what more than 10 analysts told Reuters is a bleak outlook for banks trying to deleverage, $6.5 billion of which is in leveraged loans and respectively $3 billion in secured and unsecured bonds included in purchase of Twitter.
Several debt sales by major banks have recently failed, Reuters said, citing $3.9 billion related to the Lumen Technologies purchase that failed to sell last week and another $700 million lost when Banks attempted to sell $4.55 billion in debt used to purchase Citrix.
Unfortunately, like Musk, these banks are on the hook because of the Twitter deal, said Chris Pultz, merger arbitrage portfolio manager at Kellner Capital, “and they have an even bigger headache” than they did with the Citrix deal. Now that the richest man in the world (for now) has decided to buy Twitter with his money, Wall Street financiers are just on board, losses and all. ®
https://www.theregister.com/2022/10/05/musktwitter_twitter_trial/ Musk-Twitter deal bid didn’t stop process, judge says • The Register