Musk’s bankers are discussing a plan to wrangle xAI debt after SpaceX merger

By Claire Ruckin and Ryan Gould, Bloomberg

Elon Musk’s bankers are working on a potential financing plan after the merger of SpaceX and xAI that could trim some of the heavy interest costs that the billionaire racked up in recent years, according to people familiar with the matter.

Musk built up a debt stack of almost $18 billion with his buyout of Twitter and the creation of his artificial-intelligence developer. A financing deal, which isn’t final, would be expected to help reduce that expensive debt burden ahead of an anticipated initial public offering later this year, said the people, who asked not to be identified because the talks are confidential.

Representatives for SpaceX and xAI didn’t immediately respond to a request for comment.

Morgan Stanley, which led Musk’s buyout of Twitter in 2022 and xAI’s subsequent debt raising, is expected to take a leading role in any financing plan, said the people. Morgan Stanley is also one of the banks lined up to lead SpaceX’s IPO, along with Goldman Sachs Group Inc., Bank of America Corp. and JPMorgan Chase & Co., Bloomberg previously reported. No final decisions have been made and details of the IPO could change.

A representative for Morgan Stanley declined to comment, as did representatives of the other banks.

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The world’s richest man has a mixed track record with debt markets. His acquisition of Twitter — since rebranded as X — was fueled by a $12.5 billion financing package that continues to weigh down the company, servicing tens of millions in interest payments every month.

The social media firm’s banks were initially stuck holding that debt after a chaotic start to Musk’s ownership. That left potential investors initially shunning the debt on concern that Musk’s approach to content moderation would torpedo ad revenue. In April, the banks finally offloaded the last of Twitter’s buyout debt from their balance sheets, selling the final slug, a $1.23 billion portion, at a fixed rate of 9.5% and at a discounted price of 98 cents on the dollar.

Other holders of X debt included Bank of America, Barclays Plc, Mitsubishi UFJ Financial Group Inc., BNP Paribas SA, Mizuho Financial Group Inc. and Societe Generale SA.

Musk merged the site with xAI last March, valuing the social network at $45 billion, including debt. The artificial-intelligence startup then took on a further $5 billion of debt. Creditors, worried about the company’s profitability and its thirst for cash, asked xAI to refrain from raising similar debt again, Bloomberg reported.

The acquisition of xAI was announced in a statement on SpaceX’s website on Feb. 2, signed by Musk and confirming a Bloomberg News report.

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