Not all shareholders have been bought out , notably the saudi investment continues and is rolled forward as equity shares into the new structure, they retain the same amount of ownership as before .
Also he raised equity investment commitments from a16z , Sequoia , Ellison and few others as well who likely come in as new investors.[1]
So he still has a few shareholders but those who are accredited and have much higher risk appetite and long term view unlike not qtr to qtr of typical public companies so twitter wont be buffeted with market forces like FB is now when trying something radical.
[1] while some of 7B equity investment secured backed out since April , few publicly affirmed their intent to participate recently, no one knows how much was still on table and how much musk took.
Oh, I see. I have no idea. My intuition is that it's like a standard loan, as in he can do whatever he wants but if he doesn't pay it back then they'll come after his other assets he supposedly put up as collateral. That's just me guessing. I have no idea how that works at that scale of financing.
Debt financing is different than buying shares in the company. There is no fiduciary responsbility in the strict sense of the meaning. But, there is an obligation to pay back the loan with interest.
He doesn't have any duties to debt investors beyond what's explicitly in a contract with them. If he has equity co-investors (which he was certainly attempting to syndicate at one point) then those are indeed shareholders (private rather than public, but still shareholders) and he'll have duties to them.
On the contrary, LBO debt investors typically have clauses to be able to convert their debt to equity and basically force liquidation/sale etc to recover the money they put in if their debt is defaulted on.
The 13 billion in loans are secured not complete junk.
Of course if cash flows become too low to service the debt (I.e. default), musk can always inject[1] more capital and keep the debt serviced he can afford to do that by leveraging (or selling)TSLA and SpaceX stock easily or use other financing options
(1) he could also buy the debt directly himself without changing capital structure, or refinance it by lending the company money personally
or have one of his other companies lend Twitter money,
he did this between spaceX and Tesla once , it is more difficult with TSLA today- he will get sued . However he controls the board and has the power. He did force TSLA by solarCity and won the lawsuit as well so not implausible.
None of that contradicts what I said. Yes, there may be various terms that take effect if he defaults on the debt and some of them may cause him to take on fiduciary obligations (although I find it hard to imagine converting to equity would be desirable in that case - normally in that scenario the equity is getting zeroed). But he has no such obligations unless and until he's getting close to default.
Also he raised equity investment commitments from a16z , Sequoia , Ellison and few others as well who likely come in as new investors.[1]
So he still has a few shareholders but those who are accredited and have much higher risk appetite and long term view unlike not qtr to qtr of typical public companies so twitter wont be buffeted with market forces like FB is now when trying something radical.
[1] while some of 7B equity investment secured backed out since April , few publicly affirmed their intent to participate recently, no one knows how much was still on table and how much musk took.