Elon Musk Looks to Raise $3 Billion to Pay Off Twitter Debt | MONEY TALK

[AUDIO TRANSCRIPTION]

Welcome to Bryf, your go-to source for breaking news, analysis, and commentary from around the world. I'm Kyla, and today we're discussing a report that Elon Musk is exploring ways to raise up to $3 billion to help pay off the debt he incurred when he bought Twitter.

According to sources familiar with the matter, Elon Musk's team has held talks with investors about selling up to $3 billion in new Twitter shares. The funds, if raised, could be used to pay down an unsecured portion of the debt that carries the highest interest rate within the $13 billion Twitter loan package.

As many of our listeners may be aware, Twitter has been struggling to keep advertisers on the platform. In November, Elon Musk said Twitter had suffered “a massive drop in revenue” and was losing over $4 million a day. He even mentioned that bankruptcy was a possibility for the company. However, Elon Musk later shared more upbeat prospects for the company, saying he expects Twitter to be roughly cash-flow break-even in 2023 as he has slashed some 6,000 jobs.

The state of the fundraising talks is currently unknown. In mid-December, Elon Musk’s team reached out to new and existing backers about raising new equity capital at the original Twitter takeover price. But, some prospective backers have said they are hesitant to invest due to concerns about Twitter's financial performance.

Fidelity, one of the co-investors that backed Elon Musk’s takeover of Twitter, wrote down its stake in Twitter by 56% in November, which suggests that Elon Musk would face an uphill battle raising funds at the original valuation from outside investors. The banks holding the $13 billion in debt that backed his takeover of the company haven’t yet received any formal notice of any repayments, sources say.

Repaying the unsecured bridge loans would leave Twitter with a debt burden that has much more manageable interest rates. Twitter’s $6.5 billion in term loans and $3 billion in secured bridge loans carry an annual interest burden of 4.75% and 6.75%, respectively, plus the overnight rate, according to public filings.

A potential deal would also provide a degree of relief for the banks that backed Elon Musk’s takeover of the social-media company and that intended to sell the debt to third-party investors but changed course after deteriorating market conditions sank Wall Street’s appetite for exposure to risky bonds and loans.

The $13 billion of Twitter debt on bank balance sheets, one of the biggest “hung deals” of all time, has helped contribute to a drag in the number of mergers and acquisitions as banks’ firepower to back deals is tied up.

It remains to be seen if this fundraising effort will be successful and what impact it will have on Twitter and its shareholders.

And that's it for today's episode of Bryf. We hope you've enjoyed our in-depth coverage of Elon Musk's efforts to raise $3 billion to help pay off Twitter's debt. As we've discussed, the company has been struggling financially and a successful equity raise could provide relief for both Twitter and the banks that backed Elon Musk's takeover of the company.

But as we've also noted, given the concerns about Twitter's financial performance and the current market conditions, it may be an uphill battle for Elon Musk to secure the funding he needs. So, stay tuned as we continue to bring you the latest developments on this story as they unfold. And remember, for unbiased and up-to-the-minute coverage of the stories that matter most, follow us here at Bryf. This is Kyla, signing off for now. Thanks for tuning in!

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