Musk Attempted to Abandon Twitter Deal via Text Threats

FACTUAL ALLEGATIONS

VII. Defendants materially breach their obligations to work toward closing and refrain from unreasonable withholding of consent to operational changes

A. Defendants abandon financing-related efforts and breach Section 6.10(d)

109. Musk’s distortive public statements about the deal, and his increasingly aggressive information demands through counsel, raised Twitter’s suspicion that he was secretly abandoning efforts to finalize the committed debt financing in time for a prompt closing. Section 6.10 requires defendants to take all steps necessary to secure the already-committed financing for the closing.

110. Twitter’s concern deepened when, on June 23, 2022, Musk texted Twitter management to say that he had asked Swan “to depart the deal proceedings, as we are not on the same wavelength.” At the same time, Musk said he was “trying to prepare the cash flow projections necessary to secure the debt,” and asked for Twitter’s “cash flow projections over the next three years” and a comparison of historical projections to actuals — to assist “debt issuers” who “are much more conservative than equity investors.” Customarily, projections are needed well in advance of closing and before approaching ratings agencies, which is a key first step in consummating debt financing. They are the buyer’s, not the seller’s, responsibility. See Ex. 1 § 6.11.

111. Over the ensuing days, Twitter’s repeated requests for a contact in lieu of Swan generated no response. Outreach by Goldman Sachs and J.P. Morgan to Morgan Stanley likewise was met with silence.

112. Faced with this uncertainty and with Musk’s insinuations about his lenders, on June 28 and again on July 6, Twitter exercised its rights under Section 6.10(d) of the merger agreement to formally seek information about the status of Musk’s financing.

113. Defendants still have provided no substantive response. Instead, the day after the first of these requests, Musk warned Agrawal and Segal to back off:

Elon Musk's text to Parag Agrawal (CEO) and Ned Segal (CFO)

114. On June 30, 2022, Musk informed Segal that replacement team member (and long-time Musk confidant) Antonio Gracias would be taking over the financing effort that Swan had helmed. But Gracias never appeared.