April 28 (Reuters) - Elon Musk told banks that he had agreed to help with his $44 billion acquisition of Twitter Inc (TWTR.N) to cut costs as an executive and will work as Three people familiar with the matter said the board may take a pay cut, and will develop new ways to monetize the tweets.
Sources said Musk made the pitch to lenders as he tried to secure a loan for the purchase days after he submitted his offer on Twitter on April 14. Submitting his bank commitments on April 21 was crucial for Twitter's board to acknowledge his "best and final". , Proposal.
Musk had to convince banks that Twitter produced enough cash flow to service the loans he sought. In the end, he received $13 billion in loans secured against Twitter and $12.5 billion in margin debt tied to his Tesla (TSLA.O) stock. He agreed to pay the balance amount out of his cash.
Sources said Musk's pitch to Banks constitutes his vision rather than firm commitments, and the exact cost-cutting he will make once he owns Twitter is unclear. Sources said the plan he told banks was thin in detail.
Musk has tweeted about eliminating the salaries of directors on Twitter's board of directors, which could result in nearly $3 million in cost savings. Twitter's stock-based compensation for the 12 months ended December 31, 2021 was $630 million, a 33% increase from 2020, corporate filings show.
In his pitch to banks, Musk also pointed to Twitter's gross margin, which is a way more cost-effective than Meta Platform Inc. (f.).
The sources requested anonymity as the matter is confidential. A Musk representative declined to comment.
Bloomberg News reported earlier on Thursday that Musk specifically mentioned the job cuts as part of his pitch to banks. One of the sources said Musk would not make a decision on job cuts until he assumes ownership of the company later this year. They went ahead with the acquisition without knowing confidential information about the company's financial performance and workforce.
Musk told Banks he also plans to develop features to increase business revenue, including new ways to make money from tweets containing important information or tweets that go viral, the sources said.
The views they bring include charging fees when a third-party website attempts to quote or embed Tweets from verified individuals or organizations.
In a tweet deleted later this month, Musk suggested changes to the social media giant's Twitter Blue premium subscription service, including slashing its price, banning advertising, and offering the option to pay in the cryptocurrency Dogecoin. . is included. is included. Twitter's premium Blue service now costs $2.99 a month.
Musk deleted another tweet, in which he said he wanted to reduce Twitter's reliance on advertising for its revenue.
Musk, whose net worth is estimated by Forbes at $246 billion, has indicated he will support banks in marketing syndicated loans to investors, and he may reveal more details of his business plan on Twitter, according to sources. according. They said.
Musk has also appointed a new chief executive for Twitter, with a source who declined to name the person's identity.
The chief executive of Tesla Inc (TSLA.O) also told banks that he would seek moderation policies on the social media platform that are as free as possible within the legal constraints of each of the jurisdictions operated by Twitter, the sources said. The position that Musk has publicly reiterated.
The $13 billion Twitter debt is equivalent to seven times Twitter's estimated 2022 earnings before interest, taxes, depreciation and amortization. Sources said this was too risky for some banks, which decided to participate only in margin lending.
Another reason some banks pulled out, according to sources, is that they feared that Musk's unpredictability could result in a brain drain from Twitter, affecting his business.
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