In this photo illustration Elon Musk Twitter seen displayed on a smartphone screen with Twitter logo in the background in Chania, Crete Island, Greece on April 23, 2022.
Nikolas Kokovlis | Nurphoto | Getty Images
Elon Musk, CEO of SpaceX and Tesla, could be required to pay Twitter a termination fee of $1 billion, under some circumstances, such as if Musk fails to secure enough debt funding to complete his $44 billion deal to buy the company, according to a new SEC filing.
From the filing (Parent refers to the special corporation Musk created to buy Twitter):
As described above, if the conditions to Parent’s and Acquisition Sub’s obligations to complete the Merger are satisfied and Parent fails to consummate the Merger as required pursuant to the Merger Agreement, including because the equity, debt and/or margin loan financing is not funded, Parent will be required to pay Twitter a termination fee of $1.0 billion.
On the other hand, Twitter will owe Elon Musk a $1 billion break-up fee should it fall through if it accepts a competing offer, or if shareholders reject the deal, according to the same filing.
The deal is slated to close by Oct. 24, but could be delayed for up to six months for antitrust clearance or other reasons.
Musk offered to buy the company at $54.20 per share and take it private. He said in a filing earlier this month that he received commitments for $46.5 billion to help finance the deal, including $25.5 billion in debt financing from Morgan Stanley Senior Funding and other firms, and $21 billion in equity financing.
If the deal is completed, it would represent the end to a remarkable saga that kicked off when Musk disclosed a large stake in Twitter, where he’s been a devoted user for years. Soon after, Twitter said that Musk would join the board, only to reverse course on the plan a few days later. After that, he offered to buy the company.
Musk has said Twitter should operate as a digital public square that is tolerant of different viewpoints.
Subscribe to CNBC on YouTube.
WATCH: What does Elon Musk’s Twitter buyout mean for free speech?