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Elon Musk: Officially a fraud and piece of shit. Official or unofficial war criminal?


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Had CNBC talking heads on in the background while working today, so take this with a grain of salt:

They all said he has all the leverage.  Twitter can't afford a 5-7 year dragged out lawsuit while their stock is hemorrhaging stock value, and without a plan to monetize their accounts.  Plus a management in dissaray, and 7000 employees without any clear picture of a future and no ability to attract new talent.

One said they let the fox in the house and he's eating.

Fucked up, but they all pretty much said they'll have no choice but to negotiate a lower purchase price or find someone else that might be interested now that valuation has plummeted.

TIFWIW

 

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3 minutes ago, Ag with kids said:

Interdasting...

Twitter falsified official data.

Musk made them provide actual data. 

Data shows Twitter was full of shit. 

Musk says fuck you, you lied to me.

Twitter says I'm gonna sue!!!!

Please show your work.  I haven’t seen any of this data showing Twitter was “full of shit”.  I think we found an Elon adept here.

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6 minutes ago, Ag with kids said:

Interdasting...

Twitter falsified official data.

Musk made them provide actual data. 

Data shows Twitter was full of shit. 

Musk says fuck you, you lied to me.

Twitter says I'm gonna sue!!!!

 

2D459A8F-57C7-439C-9C15-9F7B79346ECA.jpeg

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11 minutes ago, Hefeweizen said:

Please show your work.  I haven’t seen any of this data showing Twitter was “full of shit”.  I think we found an Elon adept here.

We'll see if they actually want to sue...

Here's a far right website that details his position...

https://www.nbcnews.com/business/business-news/elon-musk-twitter-cancel-purchase-deal-rcna32211

Quote

The Tesla CEO said in a filing Friday afternoon that he believed Twitter was in material breach of multiple provisions of the April 25 sale agreement — including Musk’s request that the company share information about the number of fake and spam accounts on the social media platform.

 

"Twitter has not provided information that Mr. Musk has requested for nearly two months notwithstanding his repeated, detailed clarifications intended to simplify Twitter’s identification, collection, and disclosure of the most relevant information sought in Mr. Musk’s original requests," the filing states.

 

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So where is the evidence?  That is a statement by Musk.  I’m sure you saw data that proved they were full of shit, right?

Prove that it’s not true. Ha! Gotcha.

Who to believe: powerful social media corporation or powerful billionaire weirdo? I’m not a big fan of corporations, but Musk has shown to be a pretty consistent manipulator. Interdasting indeed.
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10 hours ago, MonkeyDoughnut said:

Elon can't just pay $1B breakup fee because he wants to. There are limited reasons and the bot question is not one. He's on the hook here and will either go through with it or pay many billions in a dragged out lawsuit that he will almost certainly lose.....

That said he's down $20B on the deal currently so he's got some wiggle room.

He can’t terminate and pay the break fee period; it’s a reverse break fee triggered by Twitter terminating the agreement as a result of Elon committing a material breach or failing to close when otherwise required (presumably failure of financing). 

He’s purportedly exercising his customary termination right resulting from a breach by Twitter that would result in a condition failure (failure to comply with covenants in all material respects). There are some other throw away arguments in the letter as well.

I suspect he has a losing (albeit plausible on its face) argument and Skadden knows that, but I question whether Twitter had the stomach and resources to fight. In their ideal world, I think they’d like to take a large settlement and keep the company public.

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9 minutes ago, Bozo_Casanova said:

Interesting thread 

He’s absolutely right that any lawyer would rather be in Twitter’s shoes vs Musk’s from a contractual standpoint, but that’s assuming both sides are equally financially motivated/capable of pursuing litigation to judgment. I hope that’s the case, but not so sure Twitter won’t fish for a settlement to save face and go about their business. 

Although, having said that, Musk doesn’t seem like a rational person. He might very well push forward with litigation even if Skadden is advising him to settle, just for sport. Great deal/case to be a Skadden partner; terrible deal/case to be a Skadden associate.

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14 hours ago, Hefeweizen said:

So where is the evidence?  That is a statement by Musk.  I’m sure you saw data that proved they were full of shit, right?

Well...It's a little more than just a statement by Musk.  It's a legal filing with the SEC.  I don't think they accept "because I said so" as justification...

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2 minutes ago, Ag with kids said:

Well...It's a little more than just a statement by Musk.  It's a legal filing with the SEC.  I don't think they accept "because I said so" as justification...

Yeah....you're still not getting any traction here.  Twitter disclosed their estimated "bot account" number, their methodology for that estimate, and the statement that it was an estimate, and the exact number couldn't readily be calculated.  And Musk accepted that in his bid.

You're flailing here.  Just like Elon is.

The fact that this is playing out exactly like most of the level-headed folks thought it would should give you pause.

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16 minutes ago, Ag with kids said:

Well...It's a little more than just a statement by Musk.  It's a legal filing with the SEC.  I don't think they accept "because I said so" as justification...

And Musk has a long track record of being on the up and up with the SEC??

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Twitter provided Musk with the raw stream of data but it remains to be seen if he can make anything of it. Nevertheless he made the offer well after he started complaining about the bot count, and waived any due diligence. So to cite that as the reason to break the deal now is disingenuous.

Now the tech market has tanked and he is trying to right-size the purchase price, IMO. He can afford a billion to walk if it comes to that.

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1 hour ago, Ag with kids said:

Well...It's a little more than just a statement by Musk.  It's a legal filing with the SEC.  I don't think they accept "because I said so" as justification...

As any lawyer knows, American jurisprudence has never seen statement in a legal filing that wasn’t supported by evidence. 

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18 hours ago, Mach 1 said:

Had CNBC talking heads on in the background while working today, so take this with a grain of salt:

They all said he has all the leverage.  Twitter can't afford a 5-7 year dragged out lawsuit while their stock is hemorrhaging stock value, and without a plan to monetize their accounts.  Plus a management in dissaray, and 7000 employees without any clear picture of a future and no ability to attract new talent.

One said they let the fox in the house and he's eating.

Fucked up, but they all pretty much said they'll have no choice but to negotiate a lower purchase price or find someone else that might be interested now that valuation has plummeted.

TIFWIW

 

Is this a joke?

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7 hours ago, Reynolds Woodcock said:

Great deal/case to be a Skadden partner; terrible deal/case to be a Skadden associate.

This reminds me of when I was working for a huge company that was buying another huge company which triggered a bloody proxy fight.
I called one of our lawyers at about 5:15 one afternoon and asked “what are you doing,” and he said “having a drink in my backyard and feeling grateful to be in-house counsel.”

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1 hour ago, Bookman said:

Is this a joke?

Curious why you asked it in that way, as I found the practicalities of the post to be what is probably most accurate. Twitter has a good legal case but doesn’t have the runway and bandwidth and appetite or tolerance for distraction and lengthy noise that Elon presumably has.
 

It seems obvious Elon is being a goon and using his leverage to negotiate a better deal based on the market dump and/or trying to get out of it entirely for a billion dollars. 

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2 hours ago, Vegas64 said:

Curious why you asked it in that way, as I found the practicalities of the post to be what is probably most accurate. Twitter has a good legal case but doesn’t have the runway and bandwidth and appetite or tolerance for distraction and lengthy noise that Elon presumably has.

Elon has a bullshit case, but if you are Twitter, and especially if you are thinking about Twitter as an operating business, you want Musk to go away and be able to forget about it all. Trying to force somebody you don't want buying your company to buy your company is asking for business operations paralysis. Twitter should try and get money in court later, but for now they need to move on.

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Elon has a bullshit case, but if you are Twitter, and especially if you are thinking about Twitter as an operating business, you want Musk to go away and be able to forget about it all. Trying to force somebody you don't want buying your company to buy your company is asking for business operations paralysis. Twitter should try and get money in court later, but for now they need to move on.

Alternate take: the business goal of the current board is to maximize shareholder value. Having a sucker on the hook to pay more than the company is worth is very important to that goal.
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7 hours ago, Ag with kids said:

Well...It's a little more than just a statement by Musk.  It's a legal filing with the SEC.  I don't think they accept "because I said so" as justification...

You are so stupid it hurts. The actual statement said this:

"preliminary analysis by Mr. Musk’s advisors of the information provided by Twitter to date causes Mr. Musk to strongly believe that the proportion of false and spam accounts included in the reported mDAU count is wildly higher than 5%."

He looked at the data they provided and couldn't prove them wrong, but he says he still strongly believes they're lying. If he had actual evidence that their statements were in fact false, he'd have provided it.

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Can someone explain like I'm five why this lawsuit would need to be expensive? Seems pretty open and shut to me. Elon knew about the bots, he waived the right to do due diligence, and now he's welching on the deal.

The law twitter explainer guys seem to think very little of the formal letter he sent to the SEC. Why would it be expensive for Twitter? And shouldn't those expenses be paid by the loser (Elon) in this case?

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45 minutes ago, pantone159 said:

Elon has a bullshit case, but if you are Twitter, and especially if you are thinking about Twitter as an operating business, you want Musk to go away and be able to forget about it all. Trying to force somebody you don't want buying your company to buy your company is asking for business operations paralysis. Twitter should try and get money in court later, but for now they need to move on.

Agree 100%, but this doesn’t explain why the poster responded to the guy asking of his post (and to an extent this take) is a joke. Am I missing the incredulity?

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21 minutes ago, Brisketexan said:


Alternate take: the business goal of the current board is to maximize shareholder value. Having a sucker on the hook to pay more than the company is worth is very important to that goal.

And the point is they don’t have the runway or operational capacity to survive the ability to keep that sucker on the hook.

He knows that. Everyone knows that. So he threw down his cards.

 

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13 minutes ago, chainsaw said:

Can someone explain like I'm five why this lawsuit would need to be expensive? Seems pretty open and shut to me. Elon knew about the bots, he waived the right to do due diligence, and now he's welching on the deal.

The law twitter explainer guys seem to think very little of the formal letter he sent to the SEC. Why would it be expensive for Twitter? And shouldn't those expenses be paid by the loser (Elon) in this case?

first time?gif

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3 minutes ago, Mach 1 said:

first time?gif

They said the lawsuit would be in Delaware, and that they can move fast to a judgment in Delaware. I get that Twitter isn't exactly swimming in profit, but they probably can afford a case that's this simple. I don't buy the "not enough money to fight back" narrative.

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8 minutes ago, chainsaw said:

Can someone explain like I'm five why this lawsuit would need to be expensive? Seems pretty open and shut to me. Elon knew about the bots, he waived the right to do due diligence, and now he's welching on the deal.

The law twitter explainer guys seem to think very little of the formal letter he sent to the SEC. Why would it be expensive for Twitter? And shouldn't those expenses be paid by the loser (Elon) in this case?

My understanding is because these lawsuits are always expensive. And long drawn out. When you have the resources in money to burn and the top legal pros you can prolong and obfuscate and delay and appeal and all manner of shenanigans to make it more convenient and painless to make the headache go away. And the richest man in the world has those resources in spades, along with a contrarian and pest personality.

But you bring up a good point in that if you are Bret Taylor and Twitter, you probably (though who really knows) win this and stick Elon with the big bill and failing business. But here is the risk as I see it as an organizational leader:

You have a situation that is causing a lot of noise and distraction within the business right now.

Twitter is in a hiring freeze and just laid off a bunch of folks last week. Uncertainty is the middle part of FUD after all and it’s known to cripple momentum and efficiencies and culture.
 

You have leaders without autonomy (current CEO), you have Elon with his fear mongering of how he would run Twitter (no WFH, inefficient headcounts, inefficient GTM, etc.) so you have a confused employee base.
 

The good employees are leaving, have left or are planning to leave and the rest are just going to collect a check.

No strategic imperatives will be driven forward.

Stock price will continue to crater.

All of this is a recipe for, at best a further declining business, at worst an existential crisis.
 

You stick Elon with this flaming turd and get paid out big, Bret Taylor and Twitter BoM are brilliant. The risk is a less than optimal outcome and Twitter is a dumpster fire and they have to clean it up with Elon skating away for a billion bucks or some other slap on the wrist amount of money which doesn’t go near far enough to make Twitter whole from the damage that will be caused. 

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12 minutes ago, chainsaw said:

They said the lawsuit would be in Delaware, and that they can move fast to a judgment in Delaware. I get that Twitter isn't exactly swimming in profit, but they probably can afford a case that's this simple. I don't buy the "not enough money to fight back" narrative.

I’m traveling now read my post last page 

*or better yet above

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There are actually to recent and relevant business cases that I’d point to (and I’ll link when I get home or you can Google) which node in Elon’s favor despite not having the technical and legal high ground. At the very least these are inputs in Twitters risk calculus:

- Anaplan and their takeover of a PE firm that did the same thing as Elon due to the tech sell off and forced Anaplan to renegotiate at a lower price

- Revlon and Citi where one obviously accidentally paid off a couple hundred million dollar loan instead of a much smaller interest payment and all legal beagles said they had an open and shut legal case and the judge ruled against them in a surprise and it’s tied up in appeals (and Revlon since filed for bankruptcy protection while becoming a meme stonk).

 

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4 minutes ago, elfenix said:

revlon sparked another biz law case?

Spoiled it for those who don’t care but the net net is that you never 100% know how a court will rule (in business or politics)so there is always risk. Settling is a de-risking and risk management move 1000% of the time.

  • In 2016, Revlon Inc. borrowed $1.8 billion from some banks and hedge funds using a seven-year term loan secured by Revlon’s assets. Citibank NA advised on the loan and served as its administrative agent.
  • In 2019 and 2020, Revlon took some of the collateral for the 2016 term loan and snuck it out, away from the lenders: It put much of its intellectual property, including brands like American Crew, Elizabeth Arden, Almay and Mitchum, into new subsidiaries (generally called “BrandCo”) that did not secure the 2016 loan. It borrowed some new money secured by those brands, and rolled some of the old term lenders into the new facility in order to get them to vote to approve it. There were various shenanigans involved, including doing a new revolving loan under the 2016 credit agreement in order to get just enough votes to approve the new deal. We have discussed the basic form of this many times before: If you are a company in trouble, you pay off 51% of your lenders to get them to approve hosing the other 49%. That’s what happened here: Revlon gave some of its lenders a new loan with better security (those brands), making the security for the other lenders worse. (This is explained in more detail here.)
  • The 2016 lenders who didn’t participate in the new BrandCo deal were annoyed: Their collateral had disappeared, and now they were effectively junior to the 2020 lenders. They sued Revlon, Citibank and various other people, claiming that the BrandCo deal violated the 2016 credit agreement and was invalid. If they won … I dunno, it would be a mess if they won, but generally speaking if they won then they would get those brands back as collateral for their loans.
  • The day before they filed that lawsuit, Citi paid them off by accident. Oops! This was very funny and we have talked about it a lot, but the gist is that Citi, as administrative agent for the loan, was supposed to pass along a small interest payment from Revlon and accidentally paid off the whole loan with its own money.
  • Citi politely asked the 2016 lenders for the money back, but the lenders were really mad at Citi for helping with the BrandCo transaction, so some of them — who had gotten about $500 million of Citi’s money — said no.
  • Citi sued them and, somewhat shockingly, lost
  • Citi appealed. I assume Citi will win on appeal, but then I assumed they’d win in the trial court so who knows. The appeal is still pending and could take a while.
  • Meanwhile the thing everyone worried about happened, and Revlon filed for bankruptcy last week.
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The Anaplan/PE re-pricing case study referenced, in full in a spoiler, for those who care. It's absolutely something Elon/Twitter know about. 

Here is the net net:

Anaplan’s board was annoyed, but also intimidated: The market had dropped, and fighting this would be risky:

On the morning of June 4, 2022, members of Anaplan management held a teleconference with representatives of Goldman Sachs and Qatalyst Partners to discuss the Disputed Matters. Anaplan management informed the representatives of the reduced $61.00 per share price proposed by Thoma Bravo. Representatives of Goldman Sachs and Qatalyst Partners provided their views that the conditions in the financial markets had deteriorated since the time of the signing of the Original Merger Agreement, and that the trading prices of peer companies of Anaplan had recently declined substantially in the public equity markets. Representatives of Goldman Sachs and Qatalyst Partners discussed their preliminary views of Thoma Bravo’s proposed per share price change and discussed their views that if the dispute was not resolved in Anaplan’s favor, the potential termination of the Original Merger Agreement could have a significant negative impact on the trading price of the Anaplan common stock. Anaplan management discussed with representatives of Goldman Sachs and Qatalyst Partners that, should these conditions in the financial markets continue to exist, the potential for a transaction with another prospective bidder at a price near $66.00 per share in such situation would be unlikely.

So they agreed to the retrade, though they managed to negotiate Thoma Bravo up to $63.75, a price cut of $2.25 per share, or 3.4%, or about $400 million total. They also expressed their annoyance, to Thoma Bravo and in the proxy statement:

Spoiler

It's been a tough few months for tech stocks, and some number of buyers are regretting their choice to buy tech companies at pre-April-2022 prices. For instance, Sujeet Indap at the Financial Times reports:

Thoma Bravo has successfully pressured software company Anaplan to cut the $10.7bn price at which it is selling itself to the private equity firm, in one of the largest buyout deals to be renegotiated since this year’s market turmoil began.

California-based Anaplan disclosed on Friday that Thoma Bravo had asserted that the company had violated its merger agreement by overpaying new workers, leading the enterprise software group to agree to a 3 per cent reduction in the price of the buyout.

The buyer and seller had already announced four days earlier that the deal price of $66 per share, first announced in March, had been reduced to $63.75, to resolve a condition of closing the deal that may not have been satisfied.

But Friday’s filing offered fuller details of a dispute that erupted privately in May between Anaplan and Thoma Bravo, which has emerged as one of the dominant buyout groups that focus on technology. 

Here is that filing, with an amended “Background of the Merger” section that spells out exactly how Thoma Bravo retraded its deal with Anaplan Inc. One assumes that Anaplan’s lawyers took the lead in drafting this, and were not too interested in Thoma Bravo’s input; the result is a section that is blunt and somewhat sulky about Thoma Bravo’s excuses. Basically Anaplan thought it had a deal to continue operating in the ordinary course of business, which included hiring people and paying them; Thoma Bravo got a list of new equity awards, balked, threatened to walk away and asked for a price cut. The difference was small — the original merger agreement provided for $105 million of awards; Anaplan wanted to pay out $137 million — but it was enough for Thoma Bravo to cause trouble[5]:

Later on June 3, 2022, [Anaplan Chief Executive Officer Frank] Calderoni and a representative from Thoma Bravo held a teleconference to discuss the concerns raised by Thoma Bravo. Mr. Calderoni explained that the Anaplan Board determined that there was no basis for Thoma Bravo to reprice or refuse to close the Merger, and that the Anaplan Board had rejected any openness to engaging on a discussion of repricing the transaction. The representative from Thoma Bravo thereafter stated that its proposed equity and debt financing sources for the Merger remained concerned about the Disputed Matters and the resulting effects on Anaplan following the closing, particularly in light of the deterioration in the financial markets, and that for those financing sources to be willing to fund the Merger and to compensate Thoma Bravo for the Disputed Matters, the price per share would need to be reduced to $61.00. Mr. Calderoni noted that the Original Merger Agreement is not subject to any debt financing closing condition, and Mr. Calderoni reiterated the Anaplan Board’s position that that there was no basis for Thoma Bravo to refuse to close the Merger or request a price reduction. 

“Mr. Calderoni noted that the Original Merger Agreement is not subject to any debt financing closing condition”: Thoma Bravo has no contractual right to walk away if its debt financing disappears, but that would be a mess, so it’s a useful threat.[6]

Anaplan’s board was annoyed, but also intimidated: The market had dropped, and fighting this would be risky:

On the morning of June 4, 2022, members of Anaplan management held a teleconference with representatives of Goldman Sachs and Qatalyst Partners to discuss the Disputed Matters. Anaplan management informed the representatives of the reduced $61.00 per share price proposed by Thoma Bravo. Representatives of Goldman Sachs and Qatalyst Partners provided their views that the conditions in the financial markets had deteriorated since the time of the signing of the Original Merger Agreement, and that the trading prices of peer companies of Anaplan had recently declined substantially in the public equity markets. Representatives of Goldman Sachs and Qatalyst Partners discussed their preliminary views of Thoma Bravo’s proposed per share price change and discussed their views that if the dispute was not resolved in Anaplan’s favor, the potential termination of the Original Merger Agreement could have a significant negative impact on the trading price of the Anaplan common stock. Anaplan management discussed with representatives of Goldman Sachs and Qatalyst Partners that, should these conditions in the financial markets continue to exist, the potential for a transaction with another prospective bidder at a price near $66.00 per share in such situation would be unlikely.

So they agreed to the retrade, though they managed to negotiate Thoma Bravo up to $63.75, a price cut of $2.25 per share, or 3.4%, or about $400 million total. They also expressed their annoyance, to Thoma Bravo and in the proxy statement:

Mr. Calderoni repeated the determination by the Anaplan Board there was no basis for Thoma Bravo to refuse to close the Merger, and as a result Thoma Bravo had no basis to request a price reduction. Mr. Calderoni noted that Thoma Bravo or its financing sources appear to now have buyer’s remorse in light of the deterioration of the financial markets, and that Thoma Bravo had been seeking information from Anaplan to seek a basis to assert violations of the Original Merger Agreement in order to seek to re-negotiate the purchase price. Mr. Calderoni also asked the representative [of Thoma Bravo] to justify the magnitude of the proposed price reduction in relation to the economic impact of the Disputed Matters. Mr. Calderoni noted that the risk of protracted litigation could be damaging to both Thoma Bravo and Anaplan, and as a result, the Anaplan Board indicated it would consider, at most, a modest price decrease and only if Thoma Bravo provided substantially enhanced commitments relating to the certainty and timing of the closing of the Merger.

Arguably the interesting takeaway here is what Anaplan got in exchange for the price cut, those “substantially enhanced commitments relating to the certainty and timing of the closing.” Basically Anaplan said: Okay, you got us, you have found some arguable excuse for repricing this deal, and we are going to give you some money for it. But you can never do it again: If we renegotiate down to $63.75, you have to really close at $63.75.

Throughout the night of June 5, 2022, representatives of Anaplan management, Thoma Bravo, Gunderson, Skadden, Kirkland and Cadwalader reached an agreement upon the terms of a proposed Amendment, subject to the approval of the Anaplan Board. The proposed Amendment provided for (i) the reduction of the purchase price from $66.00 per share to $63.75 per share, (ii) limitation of closing conditionality related to compliance with Anaplan’s covenants to apply only to Anaplan’s willful breach of its covenants occurring after the date of the Amendment that are material to the proposed transactions, taken as a whole, (iii) limitation of the closing condition regarding absence of a material adverse effect on Anaplan only to events occurring following the date of the Amendment, (iv) a waiver of the closing conditions relating to Anaplan’s representations and warranties, (v) waivers with respect to all outstanding claims prior to the signing of the Amendment, including the Disputed Matters, that Thoma Bravo might have, whether known or unknown, and (vi) an increase in the termination fee payable by Parent if it fails to timely close the transaction following approval of Anaplan’s stockholders from $586,245,000 to $1,000,000,000.

That is: Anaplan agreed to reprice the deal, but in exchange Thoma Bravo agreed that it can’t get out of the deal for any reason — a false representation, a breached covenant, a material adverse effect — that occurred before last week’s repricing, and even a future covenant breach is only an excuse if it is “willful” and “material to the proposed transactions, taken as a whole.” Just paying some extra bonuses would no longer be an excuse.

 

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54 minutes ago, Vegas64 said:

Spoiled it for those who don’t care but the net net is that you never 100% know how a court will rule (in business or politics)so there is always risk. Settling is a de-risking and risk management move 1000% of the time.

  • In 2016, Revlon Inc. borrowed $1.8 billion from some banks and hedge funds using a seven-year term loan secured by Revlon’s assets. Citibank NA advised on the loan and served as its administrative agent.
  • In 2019 and 2020, Revlon took some of the collateral for the 2016 term loan and snuck it out, away from the lenders: It put much of its intellectual property, including brands like American Crew, Elizabeth Arden, Almay and Mitchum, into new subsidiaries (generally called “BrandCo”) that did not secure the 2016 loan. It borrowed some new money secured by those brands, and rolled some of the old term lenders into the new facility in order to get them to vote to approve it. There were various shenanigans involved, including doing a new revolving loan under the 2016 credit agreement in order to get just enough votes to approve the new deal. We have discussed the basic form of this many times before: If you are a company in trouble, you pay off 51% of your lenders to get them to approve hosing the other 49%. That’s what happened here: Revlon gave some of its lenders a new loan with better security (those brands), making the security for the other lenders worse. (This is explained in more detail here.)
  • The 2016 lenders who didn’t participate in the new BrandCo deal were annoyed: Their collateral had disappeared, and now they were effectively junior to the 2020 lenders. They sued Revlon, Citibank and various other people, claiming that the BrandCo deal violated the 2016 credit agreement and was invalid. If they won … I dunno, it would be a mess if they won, but generally speaking if they won then they would get those brands back as collateral for their loans.
  • The day before they filed that lawsuit, Citi paid them off by accident. Oops! This was very funny and we have talked about it a lot, but the gist is that Citi, as administrative agent for the loan, was supposed to pass along a small interest payment from Revlon and accidentally paid off the whole loan with its own money.
  • Citi politely asked the 2016 lenders for the money back, but the lenders were really mad at Citi for helping with the BrandCo transaction, so some of them — who had gotten about $500 million of Citi’s money — said no.
  • Citi sued them and, somewhat shockingly, lost
  • Citi appealed. I assume Citi will win on appeal, but then I assumed they’d win in the trial court so who knows. The appeal is still pending and could take a while.
  • Meanwhile the thing everyone worried about happened, and Revlon filed for bankruptcy last week.

Sounds like major lender liability. Citi created the situation when they were complicit in letting collateral go out the door. Citi is a terrible agent bank - I know several banks that would never do a deal that Citi leads.  They’re morons. 

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One major difference with the Anaplan deal is that El*n isn't asking for a reduction in price. He's saying he has zero interest in a deal despite signing a contract and lining up willing lenders. We'll see what a judge decides but what damage Twitter has undergone since announcement of the deal (resignation of some top staff) is because many want no part of working for El*n and have lots of other professional choices. El*n's attorney's letter pullng out of the deal is a poorly argued joke because it states zero basis to terminate the deal. El*n will lose, the only question is how much he's going to have to pay and whether a judge will be willing to enforce the specific performance provision.

Provable damages to Twitter due to El*n's bad faith will be part of the tab he has to pay one way or the other -- either when he becomes owner of the company and inherits those problems, or by paying for outright damages.

Anyone else remember the beginning of this deal? One of the first things El*n said about how he was going to improve the company was by fixing what he claimed to be Twitter's spam accounts problem. Now those same supposed spam accounts are his extremely thin justification for terminating the deal. His own words are going to help hoist him on his own petard.

  • Hook 'Em 3
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