Elon Musk to make first payment next week on $300 million loan he took out to buy Twitter

January 19, 2023  15:52

In October 2022, Elon Musk became the nominal owner of Twitter, buying the company for $44 billion. However, he and other lenders needed about $12.5 billion more to cover all the costs of the acquisition, so they had to borrow the missing portion of the money, at a fairly high interest rate. Musk is due to make the first payment on the $300 million loan next week.

According to Bloomberg, Twitter now has more money than it needs to pay off the first loan by Jan. 27․ Musk also confirmed in December 2022 that Twitter has about $1 billion in its bank accounts. However, many experts expect that the impulsive billionaire may try to do something to ease the company's debt burden. He might try to defer payment for 30 days. But since nothing is known about the terms of the loan agreement with Twitter, experts can't assess whether deferring the debt payment is possible in this particular case.

According to indirect data, Elon Musk owns about 79% of Twitter shares. And while he spent more than $20 billion to acquire them, they are now worth less than $11.6 billion.

According to experts, the path of bankruptcy at this time will be extremely unprofitable for Musk. If he decides to declare bankruptcy of Twitter, he will face a number of problems and lose a huge amount of money. And he already lost a lot last year, about $182 billion, and recently made it into the Guinness Book of World Records, breaking the world record for the largest loss of personal wealth in history.

Musk's recent actions show that he is doing everything he can to avoid bankruptcy for Twitter. Last month, he sold $3.6 billion worth of stock in his company Tesla to create a safety cushion for Twitter. In total, Musk sold at least $23 billion worth of Tesla stock to fund the acquisition of Twitter. Against this backdrop, the company's stock price has fallen 27 percent in six weeks and 69 percent since the beginning of the year.

Does Musk plan to use at least some of the proceeds from the sale of Tesla stock to buy out Twitter's debt and lower interest rates? So far, experts don't know the answer to this question, especially since lenders apparently have no interest in such a deal. Due to the crisis on the bond market, they have already lost $4 billion because they were unable to resell Twitter's liabilities to other investors.

Twitter is not doing so well right now. According to Zoe Schiffer, one of the editors of Platformer magazine, the company's revenue is down 40 percent from a year ago, even though Musk began actively cutting staff and expenses after acquiring the social network. Recently, he even auctioned off unusable furniture and equipment at the company's headquarters (located in San Francisco), which now employs two-thirds fewer people than a few months ago.

Against the background of ongoing events, the media have once again started talking about the fact that Twitter may soon begin another wave of layoffs, although Elon Musk at the end of last year said there would be no more layoffs. This time, according to media reports, 50 employees of the product department may be laid off, after which the number of employees at the company will fall below 2,000 people. When Musk bought the company, it employed about 7,500 people.


 
 
 
 
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