Home » Elon Musk Told Banks He Will Rein In Twitter Pay, Make Money From Tweets: Report

Elon Musk Told Banks He Will Rein In Twitter Pay, Make Money From Tweets: Report

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Elon Musk needed to persuade banks that Twitter produced sufficient money stream to service debt he sought.

Elon Musk instructed banks that agreed to assist fund his $44 billion acquisition of Twitter Inc that he may crack down on government and board pay on the social media firm in a push to slash prices, and would develop new methods to monetize tweets, three individuals acquainted with the matter mentioned.

Musk made the pitch to the lenders as he tried to safe debt for the buyout days after submitting his supply to Twitter on April 14, the sources mentioned. His submission of financial institution commitments on April 21 have been key to Twitter’s board accepting his “finest and remaining” supply.

Musk needed to persuade the banks that Twitter produced sufficient money stream to service the debt he sought. In the long run, he clinched $13 billion in loans secured in opposition to Twitter and a $12.5 billion margin mortgage tied to his Tesla Inc 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 slightly than agency commitments, the sources mentioned, 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 mentioned may lead to 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% enhance from 2020, company filings present.

In his pitch to the banks, Musk additionally pointed to Twitter’s gross margin, which is far decrease than friends corresponding to Meta Platforms Inc’s Fb and Pinterest, arguing this leaves loads of house to run the corporate in a extra cost-efficient means.

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 mentioned that Musk won’t make choices on job cuts till he assumes possession of the corporate later this yr. He went forward with the acquisition with out getting access to confidential particulars on the corporate’s monetary efficiency and headcount.

Musk instructed the banks he additionally plans to develop options to develop enterprise income, together with new methods to earn money out of tweets that comprise vital info or go viral, the sources mentioned.

Concepts he introduced up included charging a price when a third-party web site desires 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 value, 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 mentioned he desires to cut back 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 assist the banks in advertising and marketing the syndicated debt to buyers, and that he could unveil extra particulars of his marketing strategy for Twitter then, the sources mentioned.

Musk has additionally lined a up a brand new chief government for Twitter, one of many sources added, declining to disclose the id of that individual. He instructed Twitter’s chairman Bret Taylor earlier this month that he doesn’t believe within the San Francisco-based firm’s administration. Parag Agrawal, who was named Twitter’s chief government in November, is anticipated to stay in his position till the sale of the corporate to Musk is accomplished.

Too Dangerous For Some Banks

Musk has been inundated with gives from potential fairness companions to hitch him within the Twitter deal, and he’ll determine within the coming weeks if he groups up with somebody, one of many sources mentioned. It’s unlikely that Musk would associate with a non-public fairness agency on condition that the deal isn’t structured as a standard leveraged buyout, the supply added.

Musk disclosed this week that he offered $8.5 billion price of Tesla shares, a transfer seemingly aimed toward serving to finance his deal for Twitter. [nL2N2WR04A]

The Tesla chief government additionally instructed the banks he’ll search moderation insurance policies on the social media platform which are as free as attainable inside the authorized constraints of every jurisdiction Twitter operates, the sources mentioned, a place that he has repeated publicly.

The $13 billion Twitter mortgage is equal to seven occasions 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 mentioned.

One more reason some banks opted out is as a result of they feared Musk’s unpredictability may lead to an exodus of expertise from Twitter, harming its enterprise, in response to the sources.

A Twitter spokesperson didn’t reply to a request for remark.

(Apart from the headline, this story has not been edited by NDTV employees and is revealed from a syndicated feed.)

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