by alsocolor
I’ll keep it simple for you regards:
It says right at the end of the TWTR financing deal in purest blackest ink that if the deal doesn’t close by Oct 20th, the banks can walk away from the deal.
For those that can read: www.sec.gov/Archives/edgar/data/1418091/000110465922048128/tm2213229d1_ex99-c.htm
Regardless of Musk’s interest in the deal at this point, there’s a good chance banks really really don’t want to do this deal. It’s a crap deal, that’s obvious to even somebody as regarded as me.
Ultimately then, they would want to move the debt off their balance sheets as quickly as possible. Two options: they already have sold the debt. Now I know nothing about banks, but I assume this is unlikely, considering they haven’t given anybody money for anything anything yet. Option two: they are currently trying to sell the debt. If it’s two – now is a terrible time, with rising interest rates and a low appetite for junk bonds. There’s reports coming out that they’re having a hard time selling the junk bonds that would finance this deal to other regards.
So – if banks don’t want to do it/cant do it without taking huge losses, why can’t they just back out? The date for them to get out of their contractual obligations is Oct 20th. That’s passed. The date the twitter deal has to close is the 28th.
If banks walk, musk will owe 1Bn. Much smaller than the possible billions he could lose on this deal. So it’s somewhat in his best interest as well to let the banks walk without a fight, in that case, he just points the finger at them and says “aw shucks, I guess I couldn’t do it after all”. He got to sell billions in Tesla stock without crashing the price too hard, and ultimately comes out on top.
So my thinking is – If we don’t hear about things moving to close early this week I think the play is to LOAD up on 7DTE far far out of the money puts. Like I mean balls to the wall YOLO level puts. If the deal falls through you could see twitter go to $30 or below. Not financial advice regards, this play would be dumb risky.
Am I just extra regarded? Am I missing something entirely? Why is nobody talking about this? I feel like I’m taking crazy pills because this seems really obvious to me -which is probably why it’s one of the dumbest plays possible.
TLDR: Tell me why I’m regarded.
Current Positions: TWTR Bearish 4 Contract Spreads 10/28 (54C Buy, 50C Sell, 47P Buy, 45P Sell) $1k credit6/23 SPY Put Leaps
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence or consult your financial professional before making any investment decision.