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[U, X2] To Amplify Last Night’s Point: A Consortium Of Money Center Banks Will Effectively Decide The Fate Of Musk’s Bid — And Twitter’s Fate, As Well…

~ condor ~ Leave a comment

With the cold light of a new day, and a hot cup of coffee, I realize there is far more to be said — about how this will all very likely play out. [So forgive me, in advance — and do settle in, with your own cuppa — smile.] The punchline is this: it all means that the fate of Musk’s bid is very much dependent on whether Tesla stock begins to fade, or holds at around $1,000/share on the NASDAQ. [Update, X2: Tesla is off 7% 5% already at the open, here on Tuesday morning, “post announcement” trading day one — so, this below is already a live scenario.]

You see, Musk has pledged about $12.5 billion of his own stock in Tesla as margin callable collateral, in the vast lending and equities package being used to float the purchase and “go private” of Twitter. [Of course, should Twitter begin to dive as well, that would be a problem, but not nearly the problem… of any sizable Tesla swoon.]

There are seven main i-bankers — and by far, the ones with the most say are Morgan Stanley and B of A, each of whom are in for over $2 billion. The rest play at a lower level, but they are Morgan Stanley Senior Funding, Inc. (acting through such of affiliates or branches as it deems appropriate, “MSSF”), Bank of America, N.A. (“Bank of America”), BofA Securities, Inc. (or any of its designated affiliates, “BofA Securities”), Barclays Bank PLC (“Barclays”), MUFG Bank, Ltd. (“MUFG”), BNP Paribas (“BNP Paribas”), BNP Paribas Securities Corp. (“BNPP Securities” and, together with BNP Paribas, “BNPP”), Mizuho Bank, Ltd. (“Mizuho”) and Societe Generale (“SocGen”).

The letter I’ve linked above gives them the right to require that Mr. Musk make additional deposits of his shares, into the pledge account, should the loan ever become less than 35% secured. In plain English, that means each time the NASDAQ price of Tesla declines by even 2%, there will be creeping calls from the banks, to take more of Elon’s Tesla horde.

Thursday Twitter itself will announce Q1 2022 results. The people who know mostly expect it to be ugly — with actual GAAP losses, again. So there is a real possibility that Musk paying around $43 billion for it may be viewed as a folly. If Twitter shares start falling due to bad actual Q1 2022 results, it is highly likely that Tesla shares will as well. The two companies (even though the X Holdings structure is designed to dampen this effect)… will cross-contaminate, here.

Significantly, there is no provision for Musk to withdraw shares of Tesla from the pledge, should Tesla rise in price on the NASDAQ. The pledge stays in place, in full. To be clear, I do think Elon will get the deal closed (assuming no higher bidder appears)… but he may start to hear very loud grumbling from all his longer term institutional holders, at Tesla, if his folly begins to drag their shares southward.

So — as I say… this deal gives out-sized influence to the above seven multinational banks, and the bankers who run them… in “making suggestions” — to Musk directly, since it will be Musk’s entirely private company — and the only way to pay off these loans is either with earnings from Twitter (not likely), or the sale… of other of Musk’s assets — like his stock in Tesla.

You’ve been duly warned — this all would not be the case if Musk didn’t want 100% control, in a going private move. So it may be that through some vehicle, he retains some public / stockholder financing… just to avoid the above spiral down scenario. We shall see. Be excellent to one another. [No news yet from Amazon’s union vote.]

नमस्ते

Well… This All May Not Sit Very Well With His Tesla Holders… But Whatever.

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So… about $12 billion of the price he’s offering for Twitter is secured by his stock in Tesla.

Asssuming (as most people suspect) Twitter reports very disappointing Q1 2022 numbers this Thursday (no conference call will be held), Mr. Musk may be asked to add to his “margin/pledge” figures… and he will CERTAINLY have to add, if Tesla stock starts to decline in any material way. There is a reasonable probability that his chasing of Twitter — by pledging his stake in Tesla… will injure the interest of the public shareholders of Tesla. And, it may mean he is more readily able to once again (allegedly) manipulate Tesla’s stock price — thus:

…Elon Musk has been accused of causing market disruptions with careless tweets, but new evidence suggests that he may have been using Twitter bots to knowingly manipulate Tesla stock prices. According to a report by the Los Angeles Times, automated accounts, or bots, sent over 30,000 Tweets praising “positive” sentiments about Tesla over the course of seven years, beginning in 2013….

As a footnote, here’s Hinderaker’s offer to re-join Twitter. Yawn. Who cares? I don’t. Powerline and Trump both made great use of bots, in the past. Whatever, guys — I don’t care.

We may yet see Musk have to scrap the bid (under SEC pressure for violation of the 2018 settlement if nothing else). That may also come to pass, because at this all-cash price, it may all begin to jeopardize… his real businesses. Ironic, that. Should be good theater, either way. Do stay tuned (no word on the union vote at Staten Island No. 2). Grin.

नमस्ते

Well… The Stone-Walling… Ends Now. Otherwise, Tangerine Will Be… Jailed.

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He will now be required to deposit and pay $10,000 per day into the court (while he appeals, no doubt), or about $1.2 million every quarter he continues to refuse to allow his cell phones to imaged, in the civil fraud investigation being led by NY AG Leticia James in the Empire State.

The allegations, already largely proved by original documents obtained in The New York Times’ 2019 reporting on the case, include that Tangerine inflated the values of his properties to get loans from banks, while at the same time, minimized the value of the same properties — for the purpose of paying his New York taxes.

This is garden variety business fraud — and this case is civil, at the moment — but the criminal investigation continues toward an indictment.

In any event, if he fails to pay, and comes inside New York state for any appearance… he may be arrested and jailed, for contempt.

It is all unraveling now, for Team Tangerine:

“…Mr. Trump, I know you take your business seriously and I take mine seriously. I hereby hold you in civil contempt and fine you $10,000 per day until you purge that contempt,” Engoron said at a hearing Monday. A written decision with a start date for fines is expected Tuesday….

Perfect.

[U] Bob Reich, On Musk’s “Fee-dom” — Free For Him; Not You — On Twitter… “Musk Is To Freedom Of Speech, As Trump Is To TRUTH.”

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UPDATE: Trading halted, in Twitter. The claim is that the board has agreed to his price. Press release shortly. Ugh. This, from a guy who stifled his employees’ CONSTITUTIONAL right to speak about organizing a union, as found by an NLRB order. Ick. End update.

This is a follow up, in the relatively unlikely case Musk is able to wrest control of Twitter from its public shareholders in the next couple of weeks or months.

Hat tip, here, to The Guardian (UK), for hosting Professor Reich’s thoughts, here — he is spot on, to the syllable:

…When billionaires like Musk justify their motives by using “freedom,” beware. What they actually seek is freedom from accountability. They want to use their vast fortunes to do whatever they please — unconstrained by laws or regulations, shareholders, or even consumers.

The “free market” increasingly reflects the demands of big money. Unfriendly takeovers, such as Musk is mounting at Twitter, weren’t part of the “free market” until the late 1970s and early 1980s. Before then, laws and regulations constrained them. Then came corporate raiders like Carl Icahn and Michael Milken. Their MO was to find corporations whose assets were worth more than their stock value, borrow against them, acquire enough shares to force them to cut costs (such as laying off workers, abandoning their communities, busting unions, and taking on crushing debt), and cash in.

But the raiders’ antics often imposed huge social costs. They pushed America from stakeholder capitalism (where workers and communities had a say in what corporations did) to shareholder capitalism (where the sole corporate goal is to maximize shareholder value). Inequality skyrocketed, insecurity soared, vast swaths of America were abandoned, and millions of good jobs vanished….

The raiders altered the “free market” to allow them to do this. That’s what the super-rich do. There’s no “free market” in nature. The “free market” depends on laws and rules. If you have enough money, you can buy changes in those laws and rules that make you even more money. (You can also get the government to subsidize you — Musk has received a reported $4.9 billion, so far.)

“Free speech” is another freedom that turns on wealth. As a practical matter, your ability to be heard turns on the size of the megaphone you can buy. If you’re extremely rich you can purchase the Washington Post or own Fox News. If you’re the wealthiest person in the world you can buy one of the biggest megaphones in the world called Twitter — and then decide who can use it, what its algorithms are going to be, and how it either invites or filters out big lies….

Musk’s real goal has nothing to do with the freedom of others. His goal is his own unconstrained freedom — the freedom to wield enormous power without having to be accountable to laws and regulations, to shareholders, or to market competition — which is why he’s dead set on owning Twitter.

Unlike his ambitions to upend transportation and interstellar flight, this one is dangerous. It might well upend democracy….

Word, to your mother.

Go be excellent to one another… and keep your eye on the Amazon No. 2 vote, on Staten Island… that’s the “canary, in the coal mine” — for union organizing rights.
नमस्ते

Relief Web Highlights The Severe Hunger Problems In DRC — And How That Disproportionately Affects Women And Girls, This Morning…

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While the straight ahead medical / vaccine news on arresting the latest Ebola outbreak (the 14th by my count, since 1985) inside DRC is encouraging. . . it does highlight how endmeic serial crises like Ebola make things worse, on the basic human needs dimension, like food scarcity. [My immediately prior coverage, here.] Ebola has raged on and off for four decades, now in Sub-Saharan Africa. That toll is rapidly reaching the point of being… irreversible, as it has become generational now.

That is to say, while it may seem that the direct effects of what may turn out to only be a handful of deaths in Equater Province is manageable, and to some extent, already planned for… here in the fourth decade — the strain this puts on an already overwhelmed public health effort more widely, becomes most apparent in the plight of the most vulnerable there, after a course of months, should the outbreak linger at all. These “knock on” hunger outbreaks tend to be proportionately most deeply suffered by women and girls. Here’s the latest, overnight from ReliefWeb:

“…It is imperative we apply the lessons learned from past outbreaks to stop the spread of Ebola in DRC and beyond its borders. Women and girls are always more adversely affected during crises but are also key participants in the response to the virus and we must ensure the protection of women and girls throughout each of these multiple crises. The IRC stands in solidarity with the affected communities and is calling for immediate action and funding for frontline aid agencies to contain both outbreaks and prevent further spread.”

There are now more people facing a severe hunger crisis in the Democratic Republic of the Congo than has ever been recorded in any country. DRC ranks in the IRC’s emergency Watchlist top five for the third year in a row, reflecting persistent volatility in a country that is now in its fourth decade of a major humanitarian crisis….

Do consider a donation to OCHA / The UN ReliefWeb — or to Doctors Without Borders, to have a meaningful direct impact here. Be excellent to one another, now and always….

नमस्ते

“But, Of Course!” Hinderaker Makes The Passing Of A Senator… All About… John. Yawn.

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This is unsurprising.

What is… rather surprising… is that here Hinderaker tells a story in public that may make his client / company from that era… cringe.

John secretly got a private audience (alone — for 45 minute’s worth!) with Orrin Hatch, he says — and his “clients” (whom paid him close to $1,000 per hour, even back then) got a pre-textual five minute window… to make their plea. A plea, for which John was being paid, to optimize.

I will allow that there was a time when a solid (if hateful) conservative like Hatch might not have been embarrassed to admit he did read Powerline, from time to time — or regularly, even. Like when they caught Dan Rather in a fib.

But that time ended — about a year into 43’s second term. So around 18 years ago.

Since then, almost all solid but moral conservatives would be ashamed of the rife racism, and jingoistic nonsense posted there, daily.

No polite conservative thinks the site holds any part in/of a legitimate (even far right) debate.

So — we are left wondering who were the clients John fleeced, in order to have a private chin-waggle, with a widely-feared hard right US Senator, while at the height of his powers?

I hope they ask what became Fagre Baker Daniels… for a refund. Of the several thousand dollars, or whatever else they paid back then — for John’s time, on that day.

Geez.

Of Tangerine’s Russian Graft… While Inside 1600 Penn: EmptyWheel’s Excellent Analysis (Via The Durham Investigation’s Inadvertent Admissions).

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Again — this is all worth following in full. The web ensnaring Tangerine — and his minions… gets stickier, and stickier — as Durham disclosure materials surface in the Sussman matter (or especially, as they don’t surface, but are known to exist in Durham’s own files).

Here’s her latest on it all — do go read:

…For almost two years of Trump’s Administration, Trump was lying to cover up his efforts to pursue an impossibly lucrative real estate deal that would have required violating or eliminating US sanctions on Russia. That entire time, Russia knew Trump was lying to cover up those back channel communications with the Kremlin. That’s the kind of leverage over a President that all Americans should hope to avoid, if they care about national security….

That’s precisely the kind of leverage that Sally Yates raised when she raised concerns about Mike Flynn’s public lies about his own back channel with Russia. Russia had that leverage over Trump long past the time Trump limped out of a meeting with Vladimir Putin in Helsinki, to which Trump had brought none of the aides who would normally sit in on a presidential meeting….

Durham’s failures to provide discovery on this issue are all the more inexcusable given the fights over privilege that will be litigated this week….

Do stay tuned — could be a barn-burner! Smile….

नमस्ते

So… Could There Be A Deal? Sure. Is It Likely? Not Yet — And Not At This Price… That’s Condor’s Take.

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It took Larry Ellison (also a mercurial tech multi-billionaire, with an outsized ego) over 18 months to get the PeopleSoft board to waive the company’s pill — and agree to a friendly deal.

In the process, the bid went from $16.40/share… to over $26/a share.

There is every reason to believe that the Twitter board knows all of that history. And they know that the $26 final figure was about 30% over PeopleSoft’s 52 week prior high price. [In fairness, see also when Ellison just steamrolled the hapless Textura… in 2016, as a contra-example.]

By comparison, Twitter’s 52 week high price (prior to Musk’s violations of the SEC 13D rules in amassing his stake) was… around $72 a share. Even so, Twitter probably isn’t worth 50% more than $72. It Is probably worth around $90-$95 a share… due to the engagement and influence it offers over mainstream US thought — and to some extent, global thought.

But the WSJ is out on Sunday afternoon, with a rumor piece that lawyers for Musk are meeting with lawyers for Twitter. I for one, will be duly skeptical, that any “instant-deal” announcement is coming tomorrow or Tuesday. Unless, of course, the price on such a friendly deal approached $95. Here’s the latest rumor piece, from the WSJ, for what it is worth (subs. req. $$$):

…Twitter Inc. is re-examining Elon Musk’s $43 billion takeover offer after the billionaire lined up financing for the bid, in a sign the social-media company could be more receptive to a deal.

Twitter had been expected to rebuff the offer, which Mr. Musk made earlier this month without saying how he would pay for it. But after he disclosed last week that he now has $46.5 billion in financing, Twitter is taking a fresh look at the offer and is more likely than before to seek to negotiate, people familiar with the matter said. The situation is fast-moving and it is still far from guaranteed Twitter will do so….

We shall… as ever, see. Me? My focus will be on… Staten Island No. 2 — for the early part of the week. Smile….

नमस्ते

These “Pinkertons'” Tactics… Will Only Engender MORE “Molly McGuires”…

~ condor ~ 1 Comment

I will mightily enjoy watching all of this unfold, as it would have all been entirely avoidable — with more sensible, humane and forward thinking HR policies — and less regressive warehouse management. But whatever — the moment has arrived and we will now watch the three act play to its conclusion. Counting the vote at Amazon Staten Island No. 2 may take through mid-week, but we should know by Friday. It didn’t have to be like this, truly — that is the shame of it.

Here is the latest from The Wa Po, teeing up its coverage for Monday — and the vote. But as you will see, this is a wider trend than just one company: Starbucks, Apple and Google as well:

…At a Staten Island warehouse set to start its vote on unionizing Monday, Amazon has hired consultants to union bust, mandated classes to discourage organizing and threatened to arrest union leaders for trespassing.

“THE ALU IS TRYING TO INSULT YOUR INTELLIGENCE,” reads a flier handed out there, referring to the upstart Amazon Labor Union. In an attempt to scare workers, it alleges that the new union’s officers “can put you on trial and fine or expel you.” A message from Amazon, taped to one of the warehouse’s snack machines, blares: “The ALU is Lying to you! The only thing they guarantee is… you no longer have a voice.”

“There’s a concerted effort to prevent us from talking to workers and a concerted effort to scare workers,” said Julian Mitchell-Israel, an Amazon worker and volunteer union organizer at the warehouse, which would become the company’s second U.S. facility to join the Amazon Labor Union if it votes yes. “It’s not convincing anyone, but it’s pissing them off….”

Meanwhile, employees at an Atlanta Apple Store on Wednesday became the first to file for a vote on unionizing, and other stores are closer to doing the same. Contract workers at a Google Fiber store in Kansas City, Mo., who are employed by a third-party firm, unionized in March….

Those most ignorant of history — in this case Woody Guthrie’s narrative on union labor in the US… are doomed, to repeat it. Though to be fair, my headline is hyperbole — for clicks.

I don’t think we will ever see a return of the McGuires, or the murders committed by Pinkerton mercenaries… thankfully the time of open labor riots and violence from lethal private thugs… has come to an end. Onward, smiling expectantly, as we await the outcome tomorrow — or by Friday, more likely.

नमस्ते

Did Hinderaker Say… Anything? Nope. Not A Thing.

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Not really sure why John thinks plagiarizing long swaths of Horowitz’s hate screeds advances… any actual idea…

But he does it quite regularly now. He barely adds a sentence at the top or tail.

Largely, I surmise, because he is literally out of… ideas.

All of which fits well with the idea that he’s lost touch with what 21st Century America is really… all about.

In fact, all the Powerline boys (and Horowitz) long for a return to the 19th Century. Not even the 1950s — their economic ideas of protectionism, and stifled business speech… haven’t held currency among respectable professions… in over 120 years.

Of course, Tangerine emboldened them but he — like them… soon enough, will have died or been carted off to a memory care facility.

And no one will rise, and stand — to fill their shoes. Their filched, late one and a half century outmoded ideas (such as they are) will turn to dust, in their graves… with their withered bodies.

I’m completely okay with that. Old, dead ideas sometimes have to wait a tick, to die off.

That is, I have come to believe these boomers cannot hear reason any longer — like the Christmas bell, cut from the sleigh harnesses, in The Polar Express… reason is beyond the reach of their ears, and thus their minds.

Good bye. And… good riddance, boys.

No one will miss you.