Elon Musk told banks they agreed to help fund the acquisition of Twitter Inc. $ 44 billion, that it could crack down on executives and the board’s payroll company in a push to cut costs and develop new ways to monetize tweets, say three people who know. with the subject called. Musk took the step to lenders as he tried to secure debt for the redemption days after his Twitter bid was submitted on April 14, sources said. The submission of his bank commitments on April 21 was the key to Twitter’s acceptance of his “best and last” offer. Musk had to convince banks that Twitter was generating enough cash flow to service the debt it was seeking. In the end, it secured $ 13 billion in secured loans against Twitter and a $ 12.5 billion marginal loan linked to its stake in Tesla. He agreed to pay the rest of the consideration in his own cash. Musk’s offer to the banks was his vision, not fixed commitments, sources said, and the exact cost cuts he will pursue once he acquires Twitter remain unclear. The plan he described to the banks was meticulous in detail, the sources added. Musk tweeted about the removal of Twitter’s board salaries, which he said could save about $ 3 million in costs. Twitter-based compensation for the 12 months ended December 31, 2021 was $ 630 million, up 33% from 2020, according to corporate statements. In his proposal to the banks, Musk also noted Twitter’s gross profit margin, which is much lower than that of its counterpart Facebook and Meta Platform Inc’s Pinterest, arguing that this leaves a lot of room for company in a more economical way. The sources asked for anonymity because the matter is confidential. A spokesman for Musk declined to comment. Bloomberg News reported earlier Thursday that Musk specifically cited job cuts as part of his offer to banks. One source said Musk would not make job cuts until he took over the company later this year. It proceeded with the acquisition without having access to confidential details regarding the financial performance and the number of employees of the company. Musk told banks he also plans to develop business revenue growth features, including new ways to make money from tweets that contain important information or go viral, sources said. The ideas he developed included 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, Musk suggested a series of changes to the social networking giant’s Twitter Blue premium subscription service, including price reductions, a ban on advertising and the ability to pay in the dogecoin cryptocurrency. Twitter’s premium Blue service now costs $ 2.99 a month. In another tweet he deleted, Musk said he wanted to reduce Twitter’s advertising dependence for much of its revenue. Musk, whose net worth is tied to $ 246 billion by Forbes, has said he will support banks in marketing syndicated debt to investors and that he may reveal more details of his business plan for Twitter at the time. sources. Musk has also created a new CEO for Twitter, one source added, declining to name the man. VERY DANGEROUS FOR CERTAIN BANKS The CEO of Tesla Inc. also told banks he would pursue moderation policies on the social networking platform that are as free as possible within the legal constraints of any Twitter jurisdiction, sources said, a position Musk has publicly reiterated. . Twitter’s $ 13 billion loan equals seven times Twitter’s projected profit for 2022 before interest, taxes, depreciation and amortization. This was very dangerous for some banks that decided to participate only in the margin loan, the sources said. Another reason some banks left was because they feared that Musk’s unpredictable situation could lead to an outflow of talent from Twitter, hurting his business, according to sources. A Twitter spokesman did not respond to a request for comment. (Report by Krystal Hu in New York and Anirban Sen in Bengaluru; Edited by Greg Roumeliotis and Sam Holmes) (This story has not been edited by NDTV staff and is automatically generated by a synergy stream.)
