Elon Musk made the case to lenders as he sought finance for the buyout days after submitting his offer to Twitter on April 14, according to insiders.
According to three people familiar with the situation, Elon Musk promised banks that agreed to help fund his $44 billion acquisition of Twitter Inc that he could cut executive and board pay at the social media business in an effort to minimize expenses, and that he would discover new ways to monetize tweets.
According to the individuals, Musk made the pitch to lenders as he attempted to arrange funding for the buyout days after submitting his bid to Twitter on April 14. On April 21, his disclosure of bank pledges was critical in Twitter’s board accepting his “best and last” offer.
Musk had to persuade the banks that Twitter generated enough cash flow to service the debt he was seeking. In the end, he secured $13 billion in loans secured against Twitter and a $12.5 billion margin loan secured against his Tesla Inc equity. He promised to pay the balance of the consideration with his own money.
According to the individuals, Musk’s pitch to banks was more about his vision than hard commitments, and the exact cost reduction he will pursue once he buys Twitter is unknown. According to the sources, the proposal he detailed to banks was lacking in depth.
Musk has tweeted about cutting the pay of Twitter’s board directors, which he claims could save the company $3 million. According to corporate documents, Twitter’s stock-based compensation for the fiscal year ending December 31, 2021, was $630 million, a 33% increase from 2020.
In his pitch to financiers, Musk also mentioned Twitter’s gross margin, which is substantially lower than competitors like Meta Platforms Inc’s Facebook and Pinterest, saying that this gives plenty of room to run the company more cost-effectively.
Because the topic is private, the sources requested anonymity. A spokesperson for Musk declined to comment.
Earlier on Thursday, Bloomberg News reported that Musk expressly highlighted job cutbacks as part of his presentation to banks. According to one of the insiders, Musk will not make job-cut decisions until he takes over the company later this year. He proceeded with the acquisition despite not having access to private information about the company’s financial performance or headcount.
According to the sources, Musk informed the banks that he also aims to build features to increase business revenue, such as new ways to monetize tweets that contain significant information or go viral.
He proposed charging a fee anytime a third-party website wishes to quote or embed a verified individual’s or organization’s tweet.
Musk proposed a slew of modifications to the social media giant’s Twitter Blue premium subscription service earlier this month, including lowering the price, prohibiting advertising, and allowing users to pay in the cryptocurrency dogecoin. The premium Blue service on Twitter now costs $2.99 per month.
For the latest Sci-Tech News Follow BOL News on Google News. Read more on Latest Sci-Tech News on oldsite.bolnews.com
