In addition to financing $5 billion in debt, Elon Musk’s artificial intelligence company, xAI, is apparently looking for a $113 billion value in a fresh share offering.
Senior secured notes, a fixed-rate term loan, and a floating-rate term loan are among the debt instruments that Morgan Stanley has started to sell for xAI. A high cost of borrowing is suggested by early pricing conversations, with interest rates on the senior notes as high as 12%. According to reports, commitments are expected on June 17.
According to reports, the money raised from the debt raise would be used for “general corporate purposes” and is anticipated to help fund Musk’s significant expenditures in AI infrastructure, which include a sizable data center in Memphis.
This new funding comes as Musk’s AI business gets ready to sell $300 million worth of shares, allowing staff members to cash out their holdings. According to a report, a bigger funding round is anticipated to come next, during which xAI would provide new equity to external investors.
When xAI, which was founded less than two years ago, purchased X, Musk’s social media network that was formerly known as Twitter, it made headlines earlier this year. The AI firm has created Grok, a chatbot that competes with OpenAI’s ChatGPT and is incorporated into X. Musk claimed at the time that the deal valued X at $33 billion and xAI at $80 billion.
A number of Musk-led businesses are aggressively seeking cash rounds, including xAI. His neurotechnology company, Neuralink, recently raised $650 million in addition to the $5 billion debt offering, and the secondary stock sale of xAI contributed an additional $300 million.
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Demand for the debt sale has already exceeded $3.5 billion, demonstrating the ongoing interest in Musk’s AI aspirations.
The financing is being led by Morgan Stanley, a longtime supporter of Musk. Musk’s $44 billion acquisition of Twitter in 2022 was originally advised by the bank, which has subsequently attempted to sell off the related debt, successfully clearing the final tranche this April.
