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Elon Musk’s latest promise to buy Twitter cannot be trusted, the company told a Delaware Court of Chancery judge yesterday.
“Now, on the eve of the trial, the defendants say they intend to close down after all. ‘Trust us,’ they say, ‘we mean business this time,’ so they’re asking to be exempted from a billing in the main,” Twitter wrote in a filing, denying Musk’s request for a stay of trial. “To justify this discharge, they are proposing an injunction giving them an indefinite period of closure based on a conditional retraction of their wrongful termination notices coupled with an express caveat of all ‘claims and defenses in the event that it does not result in a Graduation is coming.’ The defendants’ proposal is an invitation to further mischief and delay.”
While Musk told the court that the debt financing needed to complete the purchase was on track, Twitter’s filing said there was a problem:
Just this morning, a company representative from one of the lending banks testified that Mr. Musk has not yet sent them a credit notice or otherwise informed them that he intends to complete the transaction, let alone on a specific timeline. The bank further testified that the key task necessary to close the deal — commemorating the debt financing — could have happened in July, but not because Mr Musk was pretending to exit the deal.
Judge Kathaleen McCormick granted Musk’s request for a stay yesterday, preventing the trial from starting as scheduled on October 17. But she seems to have heeded Twitter’s concerns because McCormick’s granting of the stay does not give Musk “an indefinite time to close.” If Musk doesn’t finalize Twitter’s purchase by October 28, a new trial would be scheduled for November.
“This promotion will be suspended until 5pm on October 28, 2022 to allow the parties to complete the transaction. If the transaction is not completed by 5 p.m. on October 28, 2022, the parties are directed to email me that same evening for November 2022 negotiation dates,” McCormick wrote
Musk is the obstacle, says Twitter
Musk’s request for a stay criticized Twitter for wanting to continue the litigation, claiming that “Twitter will not take a yes answer” and “recklessly jeopardizing the deal and gambling with the interests of its shareholders.”
Twitter’s response states that Musk should have completed the merger a long time ago:
The impediment to ending this litigation is not, as defendants say, that Twitter is unwilling to take a yes for an answer. The obstacle is that the defendants still refuse to accept their contractual obligations. For months, the defendants have pursued increasingly implausible claims and repeatedly attempted to delay the matter in order to enforce the merger agreement. Discovery has shown that each and every one of these claims is completely unfounded. Defendants have also been found to have repeatedly breached their obligation to use their best efforts to seek closure. The merger should have been completed long ago, as Defendants’ recent concessions confirm.
Musk’s filing said that “debt-financing parties are working cooperatively to fund the closing, and closing is expected on or about October 28.” However, Twitter’s response said the defendants “refused to commit to a closing date.” . They are demanding an indefinite exit at the expense of Twitter shareholders (who owe $44 billion in debt plus interest) while remaining free to change their minds.”
“Twitter is entitled to its day in court”
Twitter wrote that Musk’s proposed appointment seeks a stay.[w]without admission of liability and without waiver or prejudice [their] Claims and defenses.” Twitter said this provision would allow Musk to “invent new reasons” to avoid completing the merger.
Twitter also said Musk provided “no justification” for not having already completed the merger and violated the obligation to use “reasonable efforts” to complete the merger and to do “everything necessary, reasonable or advisable” to complete the merger funding at or before closing.” The merger agreement requires Musk to close the deal within two business days of all conditions being met, a date that “came and went on September 15,” Twitter said. (The Twitter -Shareholders approved the merger on September 13.)
Twitter’s filing ended with a request to keep the October 17 hearing date – but also said the merger could be finalized next week. “Until the defendants commit to closing as required, Twitter has until its day in court to establish its entitlement to a particular benefit and to establish the defendants’ violations to ensure full exoneration in the event that the closure is for any reason.” reason does not materialize,” the filing said. “Defendants can and should close next week. Until they do, this lawsuit is non-contentious and should go to court.”