Elon Musk is raising $5 billion in debt for his artificial intelligence startup, xAI Corp., marking the latest in a string of fundraising moves across his business empire as he shifts focus from politics back to managing his companies, Bloomberg reported.
Morgan Stanley (MS) is shopping the debt for xAI with a double-digit interest rate, according to people familiar with early pricing discussions.
The financing could help Musk continue to spend aggressively on AI infrastructure as he builds out a massive data center in Memphis.
The debt package includes a floating-rate term loan, a fixed-rate term loan and senior secured notes, said the people, who are not authorized to share the information publicly. The proceeds will go toward general corporate purposes, with commitments due June 17.Early pricing discussions are 7 percentage points over the benchmark rate for the floating-rate term loan and a roughly 12% yield on the senior notes, the report added.
Musk’s tenure in Washington, where he led a sweeping cost-cutting initiative called the Department of Government Efficiency, drew significant personal criticism and raised concerns about the performance of his companies. Since the inauguration, shares of Tesla (NASDAQ:TSLA), where Musk serves as CEO, have fallen 20%.
Alongside xAI’s $5 billion debt sale, Musk also secured $650 million in funding for his neurotechnology venture, Neuralink, and is in the process of raising an additional $300 million for xAI.