Elon Musk’s Bankers Working to Reduce xAI Debt After SpaceX Merger
According to a recent report from Bloomberg, Elon Musk’s bankers are in discussions to alleviate the debt burden that xAI has accumulated in recent years, particularly following the company’s merger with SpaceX.
xAI has amassed a total of $18 billion in debt due to various investments, including the acquisition of Twitter (now X) and the establishment of an AI development firm. The bankers are exploring financing options to reduce the high interest costs associated with this debt.
This financial restructuring aims to ease the current financial strain ahead of SpaceX’s planned initial public offering (IPO) later this year. Musk had hinted at SpaceX’s IPO intentions last month, confirming the company’s trajectory towards going public.
The report suggests that Morgan Stanley is poised to take a leading role in the financing plan, with major financial institutions like Goldman Sachs, Bank of America, and JPMorgan Chase & Co. also expected to be involved in SpaceX’s potential IPO.
Since acquiring X, Musk has had a somewhat Bloomberg described “mixed track record with debt markets.” Following the $12.5 billion financing package for X, the company now faces significant monthly interest payments.
The debt is held by a consortium of banks including Bank of America, Barclays, Mitsubishi, UFJ Financial, BNP Paribas SA, Mizuho, and Société Générale SA.
Following the merger with xAI last March, which valued the combined entity at $45 billion, SpaceX announced its intentions to revolutionize data center operations by transitioning to orbital solutions:
“In the long term, space-based AI is obviously the only way to scale. To harness even a millionth of our Sun’s energy would require over a million times more energy than our civilization currently uses! The only logical solution, therefore, is to transport these resource-intensive efforts to a location with vast power and space. I mean, space is called “space” for a reason.”
The merger between SpaceX and xAI offers numerous advantages, positioning the consolidated companies to pursue ambitious goals fueled by revenue from Starlink, a potential IPO, and AI-driven applications that could accelerate lunar base development.