Elon Musk made the pitch to the lenders as he tried to safe debt for the buyout.
Elon Musk informed banks that agreed to assist fund his $44 billion acquisition of Twitter Inc that he may crack down on govt and board pay on the social media firm in a push to slash prices, and would develop new methods to monetize tweets, three folks aware of the matter stated.
Musk made the pitch to the lenders as he tried to safe debt for the buyout days after submitting his provide to Twitter on April 14, the sources stated. His submission of financial institution commitments on April 21 had been key to Twitter’s board accepting his “greatest and last” provide.
Musk needed to persuade the banks that Twitter produced sufficient money move to service the debt he sought. In the long run, he clinched $13 billion in loans secured towards Twitter and a $12.5 billion margin mortgage tied to his Tesla inventory. He agreed to pay for the rest of the consideration together with his personal money.
Musk’s pitch to the banks constituted his imaginative and prescient relatively than agency commitments, the sources stated, and the precise price cuts he’ll pursue as soon as he owns Twitter stay unclear. The plan he outlined to banks was skinny on element, the sources added.
Musk has tweeted about eliminating the salaries of Twitter’s board administrators, which he stated may end in about $3 million in price financial savings. Twitter’s stock-based compensation for the 12 months ending Dec. 31, 2021 was $630 million, a 33% improve from 2020, company filings present.
In his pitch to the banks, Musk additionally pointed to Twitter’s gross margin, which is way decrease than friends equivalent to Meta Platform Inc’s Fb and Pinterest, arguing this leaves loads of house to run the corporate in a extra cost-efficient method.
The sources requested anonymity as a result of the matter is confidential. A Musk consultant declined to remark.
Bloomberg Information reported earlier on Thursday that Musk particularly talked about job cuts as a part of his pitch to the banks. One of many sources stated that Musk won’t make selections on job cuts till he assumes possession of the corporate later this yr. He went forward with the acquisition with out accessing confidential particulars on the corporate’s monetary efficiency and headcount.
Musk informed the banks he additionally plans to develop options to develop enterprise income, together with new methods to earn cash out of tweets that comprise vital data or go viral, the sources stated.
Concepts he introduced up included charging a price when a third-party web site needs to cite or embed a tweet from verified people or organizations.
In a tweet earlier this month he subsequently deleted, Musk urged a raft of modifications to the social media large’s Twitter Blue premium subscription service, together with slashing its worth, banning promoting and giving an choice to pay within the cryptocurrency dogecoin. Twitter’s premium Blue service now prices $2.99 a month.
In one other tweet he deleted, Musk stated he needs to lowered Twitter’s dependence on promoting for a lot of its income.
Musk, whose internet price is pegged by Forbes at $246 billion, has indicated he’ll help the banks in advertising and marketing the syndicated debt to traders, and that he might unveil extra particulars of his marketing strategy for Twitter then, the sources stated.
Musk has additionally lined a up a brand new chief govt for Twitter, one of many sources added, declining to call the identification of that particular person.
TOO RISKY FOR SOME BANKS
The Tesla Inc chief govt additionally informed the banks he’ll search moderation insurance policies on the social media platform which can be as free as attainable inside the authorized constraints of every jurisdiction Twitter operates, the sources stated, a place that Musk has repeated publicly.
The $13 billion Twitter mortgage is equal to seven instances Twitter’s 2022 projected earnings earlier than curiosity, taxes, depreciation and amortization. This was too dangerous for some banks who determined to take part solely within the margin mortgage, the sources stated.
One more reason some banks opted out is as a result of they feared Musk’s unpredictability may end in an exodus of expertise from Twitter, harming its enterprise, in line with the sources.
A Twitter spokesperson didn’t reply to a request for remark.
(Reporting by Krystal Hu in New York and Anirban Sen in Bengaluru; Enhancing by Greg Roumeliotis and Sam Holmes)
(This story has not been edited by NDTV employees and is auto-generated from a syndicated feed.)
