The cloud-based social media and messaging app Telegram appears to be in distress amid efforts to raise funds via a debt issuance. The company currently has a pending $300 million deal with Elon Musk’s artificial intelligence (AI) company xAI.

A series of tweets between Telegram’s founder, Pavel Durov, and Musk reveals that both companies have agreed on the deal, but formalities are still pending. However, Durov failed to indicate that formal terms were still pending when he announced the deal on Wednesday.

Deal Between Telegram and xAI?

On May 28, Durov took to X to inform his followers that by summer 2025, Telegram users would gain access to xAI’s generative chatbot, Grox, which he described as “the best AI technology on the market.” He stated that he had agreed with Musk on a one-year partnership to integrate the chatbot across all Telegram apps.

One perk of the deal is that Telegram’s financial position will be strengthened. xAI will pay the messaging app $300 million in cash and equity. Additionally, the agreement stipulates that Telegram will collect 50% of the revenue from xAI’s subscriptions sold on the platform.

“Together, we win,” the Telegram founder concluded.

A few hours after the announcement, Musk took to the post’s comment section to reveal that no paperwork had been signed in respect to the deal. Interestingly, Durov concurred with Musk’s disclosure, stating that the deal had been agreed in principle, but formalities were pending.

The $1.5B Bond Offering

The saga surrounding the $300 million deal comes as Telegram looks to raise $1.5 billion via a five-year bond offering backed by finance giants, including asset management firm BlackRock, Abu Dhabi’s sovereign wealth fund Mubadala, and hedge fund Citadel. BlackRock and Mubadala are existing bondholders, while Citadel is a new investor.

The Wall Street Journal reported on Wednesday that the social media company will price the bond at a yield of 9%. Investors will have the option of converting their debt into shares at a discount if Telegram goes public.

Telegram intends to use the proceeds to buy back the remaining debt from bonds it issued in 2021, which have a maturity date of March 2026. The firm has already repurchased some of those shares with $400 million in cash.

Meanwhile, Toncoin (TON), a cryptocurrency tied to The Open Network (TON), which was founded by the Telegram team before going independent, has been affected by the drama with xAI. The coin surged 23% from $2.98 to $3.69 after Durov’s announcement. However, Musk’s counter-tweet had triggered an 11% plunge to $3.27 at the time of writing.