September 06, 2023 (MLN): Elon Musk tapped SpaceX, the rocket maker he oversees as chief executive, for a $1 billion loan around the time he was acquiring the social-media company formerly known as Twitter, the Wall Street Journal reported.
The unusual loan is the latest example of how the world’s richest man has drummed up cash from his empire of companies without having to permanently part with shares, enabling him to raise funds for his wide array of endeavors.
SpaceX approved the loan, which was backed by some of his SpaceX stock, in October, and Musk drew all of it down the same month, according to documents reviewed by The Wall Street Journal.
It couldn’t be determined why he took on the debt. He paid the loan back shortly after he borrowed the money, returning $1bn with interest to SpaceX in November. Musk and SpaceX didn’t respond to requests for comment.
For years, Musk has had arrangements with banks to borrow against his shares in his companies, including Tesla TSLA 4.69%increase; green up pointing triangle, the electric-car maker where he is CEO. At privately held SpaceX, the company itself has served as his lender, WSJ added.
Musk is by far SpaceX’s largest shareholder, controlling a 42% stake and almost 79% of its voting power as of March, according to a SpaceX filing with the Federal Communications Commission. If he wants to take out a loan from SpaceX, he almost certainly can.
The borrowing last year occurred as SpaceX made big investments in its Starship rocket program and in Starlink, a satellite-internet business.
The company has raised large sums from investors to help pay for both, and Musk has urged employees to mind their spending.
In late 2021, he warned that SpaceX could face bankruptcy as it plowed cash into the huge rocket and Starlink.
The $1bn loan temporarily shifted a significant chunk of capital for SpaceX, which is intertwined with many of the most important space missions at the National Aeronautics and Space Administration and the Pentagon, to its top leader.
SpaceX had $4.7bn in cash and securities on hand at the end of last year, the documents showed. The loan represented 11% of the $9bn in equity the company reported selling since 2009, according to regulatory filings.
In November, when Musk paid back the money, he also sold almost $4bn worth of Tesla stock, and he sold a similar amount the following month, bringing the total amount of the automaker’s stock he sold over a stretch of more than a year to around $39bn.
Musk has said he would be paying more than $11bn in taxes for 2021 and he put up roughly $25bn in cash as part of his $44bn deal to acquire Twitter, now known as X, in late October.
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Posted on: 2023-09-06T17:07:18+05:00
