Elon Musk’s acquisition of Twitter, now known as X, has led to unforeseen financial challenges.
“This is just my strong, intuitive sense that having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization,” said Musk at a TED conference on the day he made his offer to buy to buy twitter.
“I don’t care about the economics at all,” said Elon Musk.
According to a report by Fortune, three of the seven banks that backed Musk’s Twitter purchase are now contemplating protective measures to shield themselves from potential financial repercussions.
Initially, these banks reportedly intended to transfer the debt to investors. However, they are now retaining the debt and considering selling the loans at considerable discounts to entities such as hedge funds or other distressed asset buyers.
Morgan Stanley, Barclays, and Bank of America Corp, which collectively funded nearly 70% of the acquisition, have reportedly settled on a shared “sell-down letter” effective until Jan. 15.
According to the report, while the specifics remain under wraps, such agreements ensure that if one bank gets an offer for its loans, the others can access the same deal proportionally. This strategy prevents potential buyers from forcing the banks into a price-lowering competition.
Moreover, the banks have voiced concerns over the opacity of X’s financial data. They are reportedly optimistic that X’s newly appointed CEO, Linda Yaccarino, will bring in a CFO who will offer a more transparent view of the company’s fiscal health. The lack of financial clarity has impeded the banks’ efforts to present a compelling package to prospective buyers.
Speculation is rife that Musk could use this situation to his advantage, either by purchasing a significant chunk of the debt at a discounted rate or by persuading the banks to forgive a portion of the loans. Such a move would bolster X’s financial standing, making the remaining debt more appealing to the syndicate.
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Edited by Miriam Onyango and Newsdesk Manager
