According to three people familiar with the matter, Elon Musk told 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 company in an effort to cut costs, and that he would develop new ways to monetize tweets.
According to the sources, Musk made the pitch to lenders as he tried to secure debt for the buyout days after submitting his offer to Twitter on April 14.
His bank commitments, which he submitted on April 21, were crucial in Twitter’s board accepting his “best and final” offer.
Musk had to persuade the banks that Twitter’s cash flow was sufficient to service the debt he was seeking. In the end, he was able to secure $13 billion in loans secured against Twitter, as well as a $12.5 billion margin loan secured against his Tesla stock. He agreed to pay the balance of the payment with his own money.
According to the sources, Musk’s pitch to the banks consisted of his vision rather than firm commitments, and the exact cost cuts he will pursue once he owns Twitter are unknown.
According to the sources, the plan he outlined to banks was lacking in detail.
Musk had to persuade banks that Twitter’s cash flow was sufficient to service the debt he was seeking.
In the end, he secured $13 billion in loans secured by Twitter, as well as a $12.5 billion margin loan secured by his Tesla stock. He agreed to pay the remaining amount out of his own pocket.
According to the sources, Musk’s pitch to the banks was more of a vision than a firm commitment, and the precise cost cuts he will pursue once he owns Twitter are unknown. According to the sources, the plan he outlined to banks lacked detail.
Musk has tweeted about cutting the salaries of Twitter’s board directors, which he claims will save the company $3 million.
According to corporate filings, Twitter’s stock-based compensation for the 12 months ending December 31, 2021 was $630 million, up 33% from 2020.
To read our blog on “For Twitter’s future, Jack Dorsey believes “Elon is the one answer I trust”,” click here
