[AI Frontline] Elon Musk's xAI plans to repay $17.5 billion in debt, clearing liabilities and preparing for IPO

Foreign reports cite sources indicating that Elon Musk’s social media platform X and AI startup xAI plan to fully repay approximately $17.5 billion in debt. Morgan Stanley, which manages the debt for X and xAI, is notifying existing lenders.

Analysts believe that the debt repayment plan for SpaceX is the most significant “financial cleanup” before the IPO, helping to avoid debt-related undervaluation at the time of the IPO. According to Bloomberg, SpaceX aims to secretly file for an IPO as early as this month, with a potential listing as early as June this year.

The report states that xAI’s $3 billion high-yield bonds will be redeemed at approximately $1.17 per dollar, representing a premium that assumes the bonds remain outstanding for at least two years.

SpaceX previously acquired xAI

The report did not disclose the capital sources for X and xAI. However, Bloomberg reports that xAI raised $20 billion in new equity funding in January of this year. When companies repay bonds early, they typically must pay penalties and compensate lenders for the interest they would have earned during the original term. The report notes that some of the debt has been outstanding for years, while other portions are less than a year old, thus incurring penalties.

X was formerly Twitter, which carried approximately $12.5 billion in debt during Musk’s acquisition. xAI borrowed an additional $5 billion in June last year, bringing total debt to $17.5 billion.

This repayment plan was developed after a series of major corporate moves. In February, SpaceX merged with xAI, which is valued at $250 billion, while SpaceX is valued at $1 trillion. The combined entity is valued at $1.25 trillion, giving SpaceX greater flexibility in restructuring xAI’s capital.

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