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Investing.com -- Elon Musk’s artificial intelligence company xAI Corp. increased the yield on its $5 billion debt offering on Friday as Morgan Stanley (NYSE:MS) finalizes commitments for the deal, according to a Bloomberg report on Friday.
The revised package now includes $3 billion of bonds with a 12.5% yield, up from the initial lower rate. Additionally, the offering features a $1 billion fixed-rate term loan with a 12.5% interest rate and a $1 billion term loan B priced at 7.25 percentage points over the benchmark rate, sold at a discount of 96 cents on the dollar.
The term loan B component previously had a smaller discount, while all debt components were initially priced at lower rates. Some investors had anticipated that the company would need to increase yields to successfully close the deal.
The debt offering, which launched earlier in June, faced challenges related to Musk’s disagreement with US President Donald Trump. Investors also expressed concerns about xAI’s financial stability. In response to these worries, the company decided to raise an additional $4.3 billion in equity and modify terms in debt documents.
Morgan Stanley, which is handling the deal, extended the deadline for commitments beyond the original Tuesday due date. Representatives from both xAI and Morgan Stanley did not immediately respond when asked for comment.
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