Elon Musk told the banks that they agreed to help fund his $44 billion acquisition of Twitter so that he could reduce the executive and board remuneration of the social media company to reduce costs. It would also develop new ways of monetizing tweets. Three people said about it. Musk appealed to creditors as he tried to impose a loan for redemption a few days after submitting the offer on Twitter on April 14. Submitting his banking commitments on April 21 was key to getting Twitter’s board to accept the best and final offer.
Musk had to convince banks that Twitter had made enough cash flow; To pay the debt requested by him. Eventually, he received a $13 billion loan secured by Twitter and a $12.5 billion margin loan related to Tesla shares. He agreed to pay the remaining remuneration with his cash.
Musk’s offer to the banks was further of a perception than a company’s commitment. The exact cost reduction he will incur once he owns Twitter remains unclear. The plan he presented to the banks was detailed. Musk tweeted about the cancellation of Twitter’s board salaries. This, he said, could lead to cost savings of about $3 million. Twitter’s stock compensation for the 12 months ending December 31, 2021, was $630 million. This is 33% more than in 2020. About banks, Musk also pointed to Twitter’s total margin, which is much lower than that of its peers, For example, Facebook and Pinterest.
Musk’s Plan for Twitter
Earlier on Thursday, it was reported that Musk specifically mentioned job cuts as part of his offer to banks. One source said Muskie would not make decisions about job cuts; Until it takes ownership of the company by the end of the year. He continued to buy confidential points about the firm’s financials and staff without entry.
Musk told the banks that he also plans to develop features to increase business revenue, including new ways to make money from tweets containing essential information or becoming viral. The ideas he put forward included paying taxes when a third-party website wants to quote or tweet from certified individuals or organizations. Prior to this month on the company, which he deleted, Elon offered some changes to the Twitter Blue Premium subscriber service, including lowering its price and banning advertising and the possibility of paying cryptocurrency in Dogecoin. Twitter Premium Blue service now costs $2.99 per month.
In another tweet that was also deleted, Elon said he wanted to reduce Twitter’s reliance on advertising for a significant portion of its revenue. Musk, whose fortune is valued at $246 billion by Forbes, said he would support banks in marketing syndicated debt to investors. He could then publish more details of his business plan on Twitter. Musk has also named a new CEO for the company, whose identity is unknown to the public.
The CEO of Tesla also told the banks that he would try a moderation policy on the social media platform. This will be as free as possible within the legal restrictions of each of Twitter’s jurisdictions. A $13 billion loan is seven times the tax, interest, and Twitter’s projected revenue. This was very dangerous for banks who decided to engage only in marginal lending. Another reason why some banks have refused is that they feared that Musk’s unpredictability could hurt businesses.