After SpaceX merges with xAI, Musk plans to advance further financing to reduce the burden of high interest debt before IPO.

According to sources familiar with the matter, after the completion of the merger between SpaceX and xAI, the banking team of Tesla, Inc. (TSLA.US) CEO Musk is working on a potential financing plan aimed at reducing the high interest costs accumulated by the billionaire in recent years and paving the way for a possible IPO later this year. Sources said that Musk has accumulated nearly $18 billion in debt through the process of acquiring social media platform X (formerly Twitter) and creating the artificial intelligence company xAI. Although the financing arrangements have not been finalized, the new plan is expected to help reduce the high debt burden before the IPO. Insiders say that Morgan Stanley is expected to play a leading role in this financing plan. The bank led Musk's acquisition financing for Twitter in 2022 and was responsible for the subsequent debt issuance for xAI. In addition, Morgan Stanley is also one of the lead underwriters for the planned SpaceX IPO, with other potential underwriters including Goldman Sachs Group, Inc., Bank of America Corp, and JPMorgan Chase. However, the banks involved have all declined to comment, and the specifics of the IPO arrangement may still change. Musk's performance in the debt market has been mixed. His acquisition of Twitter relied on a financing plan of up to $12.5 billion, still burdening the company with heavy debt, requiring millions of dollars in interest payments every month. Initially, due to market concerns that Musk's content moderation strategy would impact advertising revenue, the banks were forced to keep the debt on their balance sheets, with investors taking a cautious stance. It wasn't until April last year that the banks finally cleared the remaining acquisition debt, selling the last bond, totaling about $1.23 billion, at a fixed interest rate of 9.5% and a face value of 98 cents. In addition to Morgan Stanley, X's creditors include Bank of America Corp, Barclays, Mitsubishi UFJ Financial Group, Inc. Sponsored ADR, BNP Paribas, Mizuho Financial Group Inc Sponsored ADR, and Industrial Bank of France. In March last year, Musk merged the social media platform with xAI, valuing X at $45 billion (including debt). Subsequently, the artificial intelligence startup added approximately $5 billion in debt. Due to concerns about the company's lack of profitability and rapid cash burn, creditors once demanded that xAI avoid further large-scale debt financing.