Elon Musk’s team has been exploring a new fundraising of up to 3,000 million dollars (2,750 million euros) to help pay part of the debt of 13,000 million dollars (11,912 million euros) of Twitter for the purchase of the company, sources familiar with the matter have told Bloomberg.
In December, Musk’s representatives talked about selling up to $3 billion (2.75 billion euros) in new Twitter shares. In this sense, they explained that a successful capital increase could be used to pay off the debt that carries the highest interest rate within 13,000 million dollars.
Paying off the debt would provide financial relief for Twitter and allow it to keep advertisers on the platform. In November, Musk said that Twitter had suffered “a massive drop in revenue” and was losing more than $4 million (3.6 million euros) a day.
Musk also went so far as to say that bankruptcy was a possibility for the company, although he later shared more optimistic views, noting that he expects cash flow to “more or less” break even in 2023, having cut some 6,000 jobs. .
THE BANKS, WAITING FOR NEWS
For their part, the banks holding the $13 billion of debt have yet to receive any formal notification of any repayment.
Every quarter that passes without Twitter refinancing the debt, the interest rate rises an additional 0.5 percent, according to regulatory filings. Twitter’s first quarterly interest payment is due at the end of the month.
Twitter’s annual interest charge has increased by more than 100 million dollars (91.650 million euros) since it announced the acquisition last April, as the overnight interest rate has increased. At the time of the announcement, the overnight rate was 0.3 percent.
A potential deal would bring relief to the banks that backed Musk’s takeover of the social media company, and which intended to sell the debt to third-party investors, although tack was reversed after deteriorating market conditions.