Elon Musk Reportedly Scrambled To Assure Banks They Wouldn't Lose Money On Twitter Acquisition Despite Expected $2 Billion Hit

Comments
Loading...
Zinger Key Points
  • Elon Musk assures bankers of no losses from their $13 billion loan for Twitter buyout.
  • Banks face potential $2 billion loss if they sell their debt from the Twitter deal.
  • Get New Picks of the Market's Top Stocks

Amid concerns over X's flailing business, Elon Musk has reportedly been in discussions with bankers who financed his takeover of the social media platform, offering reassurances about their investment.

What Happened: Musk attempted to assure certain bankers, who provided him with a $13 billion loan for his leveraged buyout of Twitter (now known as X) in private conversations that they would not incur any financial losses in the deal, the Financial Times reported on Friday. 

This comes as the banks face the prospect of significant losses from their involvement in the deal.

The Wall Street Journal earlier reported that these financial backers are now confronting the possibility of a $2 billion loss if they were to sell their debt currently.

The acquisition, which had a hefty price tag of $44 billion, was a bold gamble by Musk.

The funding for this venture was sourced from several central banks, including Bank of America BAC, Barclays BCS and Morgan Stanley MS. At the time of the deal, Twitter was not generating positive cash flow, a risk that the lenders were reportedly aware of.

Also Read: Elon Musk Issues Grim Outlook On X, Shares 'Sad Truth' About Social Media Platforms

Complicating matters further, X has experienced a substantial decline in advertising revenue.

This downturn is partly attributed to Musk's controversial comments on the platform, which led to a withdrawal of advertisers such as IBM, Apple Inc. and Disney.

According to the Financial Times, there is a growing concern that the banks might not be able to divest their debt in 2024, potentially resulting in their having to maintain the debt on their books at a depreciated value.

Now Read: Elon Musk Reportedly Did Something Unusual After Making An Offer To Buy Twitter

This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo: Shutterstock

Overview Rating:
Good
75%
Technicals Analysis
100
0100
Financials Analysis
60
0100
Overview
Market News and Data brought to you by Benzinga APIs

Posted In:
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!