Twitter's Aggregate Preferred Stock Liquidation Preference Now at $163,817,605.63

Twitter announced last week that it had closed a "significant round of funding." News reports, including this one from the NYTimes, anticipated that the round would raise $100 million.

Well, that estimate was precise.

Twitter raised exactly $100,000,006.86 from the sale of 6,256,883 shares of its Series E Preferred Stock at a price of $15.9824 per share. This is assuming that it sold 100% of the Series E shares that were newly authorized in a Restated Certificate of Incorporation that Twitter filed with the Delaware Secretary of State last Tuesday afternoon.

I've got to find a way to get better at putting columns into my blog posts; but I haven't yet, so, with apologies, here again is another excerpt from a spreadsheet as a pdf.

P074tnAs the chart shows, this brings the preferred stock overhang to around $164 million. (Again, the assumption made is that all shares of each class authorized have been sold.) Because the new Restated Certificate tells us that each series has a 1x liquidation preference, and that no preferred stock series is participating, we can deduce that, in order for the common stock shareholders of Twitter (presumably including the founders) to see value in their equity on any sale of the (assumed debt-free) company, the acquisition price will have to be in excess of $164 million.

I suppose it goes without saying that $164 million is a no-brainer of a target if you are in the stratosphere where Twitter plays, but then there it is anyway as a hard number.

By the way, the Series E does not have a board seat. Every prior series of preferred is entitled to elect a director (leaving one to be elected by the Series A and the common voting together, and two to be elected by all series of preferred and the common voting together).


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