Tag: bank of america

Elon Musk Considers Raising $3 Billion to Pay Off Part of Twitter Debt: Report

Elon Musk’s team has been exploring using as much as $3 billion in new fundraising to help repay some of the $13 billion in debt tacked onto Twitter for his buyout of the company, the Wall Street Journal reported on Wednesday, citing people familiar with the matter.

According to the report, Musk‘s representatives discussed selling up to $3 billion (roughly Rs. 1,06,000 crore) in new Twitter shares in December.

Twitter did not immediately respond to a Reuters request for comment. Responding to a question whether the WSJ report was accurate, Musk said “no” in a tweet.

The Tesla boss borrowed $13 billion (roughly Rs. 24,465 crore) to close the Twitter acquisition in October from a syndicate of banks including Morgan Stanley and Bank of America.

Musk’s team has said to people familiar with the finances of the company that an equity raise, if successful, 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, the report added.

Meanwhile, advertising spending on Twitter dropped by 71 percent in December, data from an advertising research firm showed, as top advertisers slashed their spending on the social-media platform after Elon Musk’s takeover.

The recent data by Standard Media Index (SMI) comes as Twitter is moving to reverse the advertiser exodus. It has introduced a slew of initiatives to win back advertisers, offering some free ads, lifting a ban on political advertising and allowing companies greater control over the positioning of their ads.

According to the SMI data, ad spending on Twitter in November fell 55 percent from last year despite these months traditionally being a time of higher ad spending as brands promote their products during the holiday season.

© Thomson Reuters 2023

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Elon Musk-Twitter Takeover: Banks Said to Be Forced to Hold on to Twitter Deal Debt

The banks providing $13 billion (roughly Rs. 1,07,300 crore) in financing for Tesla CEO Elon Musk’s acquisition of Twitter have abandoned plans to sell the debt to investors because of uncertainty around the social media company’s fortunes and losses, people familiar with the matter said.

The banks are not planning to syndicate the debt as is typical with such acquisitions, and are instead planning to keep it on their balance sheets until there is more investor appetite, the sources said.

The banks, which include Morgan Stanley and Barclays, did not respond to requests for comment. Bank of America declined to comment. Representatives for Musk and Twitter did not immediately respond to requests for comment.

Musk agreed to pay $44 billion (roughly Rs. 3,37,465 crore) for Twitter in April, before the Federal Reserve started raising interest rates in a bid to fight inflation. This made the acquisition financing look too cheap in the eyes of credit investors, so the banks would have to take a financial hit totaling hundreds of millions of dollars to get it off their books.

Also preventing the banks from marketing the debt was uncertainty around the deal’s completion. Musk has tried to get out of the deal, arguing Twitter misled him over the number of spam accounts on the platform, and only agreed to comply with a Delaware court judge’s October 28 deadline to close the transaction earlier this month. He has not revealed details on Twitter’s new leadership and business plan, and many debt investors are holding back until they get more details on that front, the sources said.

The debt package for the Twitter deal is comprised of junk-rated loans, which are risky because of the amount of debt the company is taking on, as well as secured and unsecured bonds.

Rising interest rates and broader market volatility has pushed investors to stay away from some junk-rated debt. For example, Wall Street banks led by Bank of America suffered a $700 million (roughly Rs. 5,777 crore) loss in September on the sale of about $4.55 billion (roughly Rs. 37,556 crore) in debt backing the leveraged buyout of business software company Citrix Systems.

In September, a group of banks canceled efforts to sell about $4 billion (roughly Rs. 33,016 crore) of debt that financed Apollo Global Management’s deal to buy telecom and broadband assets from Lumen Technologies after failing to find buyers.

© Thomson Reuters 2022

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