Elon Musk turned to creditors as he tried to secure a debt to buy.
Elon Musk has told banks that have agreed to help fund his $ 44 billion acquisition of Twitter Inc. that he may impose measures against the pay of CEOs and the company’s social media board in a bid to cut costs and develop new ways to generate revenue from tweets known to three people with said stuff.
Musk made an offer to creditors as he tried to secure a buyout debt days after sending his offer on Twitter on April 14, sources said. His presentation of bank commitments on April 21 was key to the acceptance of the “best and latest” offer on Twitter.
Musk had to convince the banks that Twitter was producing enough cash to service the debt it was looking for. He eventually received a $ 13 billion loan secured against Twitter and a $ 12.5 billion margin loan tied to his shares in Tesla. He agreed to pay the rest of the remuneration with his own money.
Musk’s reference to the banks was his vision, not a firm commitment, sources said, and the exact cost cuts he will make once he owns Twitter remain unclear. The plan he outlined to the banks is subtle in detail, sources added.
Musk tweeted to cut the salaries of directors on Twitter, which he said could save about $ 3 million. Twitter’s stock-based compensation for the 12 months ended December 31, 2021 is $ 630 million, an increase of 33% compared to 2020, corporate documents show.
In his presentation to the banks, Musk also pointed to Twitter’s gross margin, which is much lower than Facebook’s and Minte Platform Inc’s Facebook and Pinterest, saying it leaves a lot of room for the company to run more profitably.
Sources requested anonymity as the matter is confidential. A Musk spokesman declined to comment.
Bloomberg News reported earlier Thursday that Musk explicitly mentioned job cuts as part of his presentation to banks. One source said Musk would not decide on job cuts until he took ownership of the company later this year. He continued with the acquisition without having access to confidential details about the company’s financial performance and number of employees.
Musk told banks he also plans to develop features to increase business revenue, including new ways to make money from tweets that contain important information or go viral, sources said.
The ideas he came up with include charging a fee when a third-party website wants to quote or embed a tweet from verified individuals or organizations.
In a tweet earlier this month, which he later deleted, Musk suggested a number of changes to the social media giant’s Twitter subscription premium service, including reducing its price, banning advertising and giving the option to pay in the cryptocurrency dogecoin. Twitter’s premium Blue service now costs $ 2.99 a month.
In another tweet he deleted, Musk said he wanted to reduce Twitter’s dependence on advertising for much of its revenue.
Musk, whose net worth is set by Forbes at $ 246 billion, said he would support banks in marketing syndicated investor debt and that he could then reveal more details of his business plan for Twitter, sources said.
Musk has also appointed a new CEO for Twitter, one source added, declining to name the person.
TOO RISK FOR SOME BANKS
The CEO of Tesla Inc also told banks that he would look for policies to moderate the social media platform that are as free as possible within the legal limits of each jurisdiction in which Twitter operates, sources said. Musk repeated publicly.
The $ 13 billion Twitter loan is equivalent to seven times Twitter’s projected profit for 2022 before interest, taxes, depreciation and amortization. This was too risky for some banks, which decided to participate only in the margin loan, sources said.
Another reason for some banks to give up is that they fear that Musk’s unpredictability could lead to the emigration of talent from Twitter, which could harm his business, according to sources.
A Twitter spokesman did not respond to a request for comment.
(Report by Crystal Hu in New York and Anirban Sen in Bengaluru; Edited by Greg Rumeliotis and Sam Holmes)
(This story was not edited by NDTV staff and is automatically generated by a syndicated channel.)
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