Musk advised banks he’ll rein in Twitter pay, make cash from tweets

about Musk advised banks he’ll rein in Twitter pay, make cash from tweets will cowl the most recent and most present steering within the area of the world. entrance slowly so that you comprehend skillfully and accurately. will lump your data adroitly and reliably

Elon Musk attends the opening ceremony of the brand new Tesla Gigafactory for electrical automobiles in Gruenheide, Germany, March 22, 2022. Patrick Pleul/Pool through REUTERS/File Photograph

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April 29 (Reuters) – Elon Musk advised banks that agreed to assist fund his $44 billion acquisition of Twitter Inc (TWTR.N) that he may crack down on govt and board pay on the social media firm in a push to slash prices, and would develop new methods to monetize tweets, three folks aware of the matter stated.

Musk made the pitch to the lenders as he tried to safe debt for the buyout days after submitting his supply to Twitter on April 14, the sources stated. His submission of financial institution commitments on April 21 had been key to Twitter’s board accepting his “greatest and last” supply.

Musk needed to persuade the banks that Twitter produced sufficient money movement to service the debt he sought. In the long run, he clinched $13 billion in loans secured towards Twitter and a $12.5 billion margin mortgage tied to his Tesla Inc (TSLA.O) inventory. He agreed to pay for the rest of the consideration along with his personal money.

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Musk’s pitch to the banks constituted his imaginative and prescient fairly than agency commitments, the sources stated, and the precise value cuts he’ll pursue as soon as he owns Twitter stay unclear. The plan he outlined to banks was skinny on element, the sources added.

Musk has tweeted about eliminating the salaries of Twitter’s board administrators, which he stated may lead to about $3 million in value financial savings. Twitter’s stock-based compensation for the 12 months ending Dec. 31, 2021 was $630 million, a 33% enhance from 2020, company filings present.

In his pitch to the banks, Musk additionally pointed to Twitter’s gross margin, which is far decrease than friends reminiscent of Meta Platforms Inc’s (FB.O) Fb and Pinterest (PINS.N), arguing this leaves loads of area to run the corporate in a extra cost-efficient method.

The sources requested anonymity as a result of the matter is confidential. A Musk consultant declined to remark.

Bloomberg Information reported earlier on Thursday that Musk particularly talked about job cuts as a part of his pitch to the banks. One of many sources stated that Musk is not going to make selections on job cuts till he assumes possession of the corporate later this yr. He went forward with the acquisition with out getting access to confidential particulars on the corporate’s monetary efficiency and headcount.

Musk advised the banks he additionally plans to develop options to develop enterprise income, together with new methods to make cash out of tweets that comprise vital info or go viral, the sources stated.

Concepts he introduced up included charging a payment when a third-party web site needs to cite or embed a tweet from verified people or organizations.

In a tweet earlier this month he subsequently deleted, Musk instructed a raft of modifications to the social media large’s Twitter Blue premium subscription service, together with slashing its worth, banning promoting and giving an choice to pay within the cryptocurrency dogecoin. Twitter’s premium Blue service now prices $2.99 a month.

In one other tweet he deleted, Musk stated he needs to scale back Twitter’s dependence on promoting for a lot of its income.

Musk, whose internet price is pegged by Forbes at $246 billion, has indicated he’ll help the banks in advertising and marketing the syndicated debt to buyers, and that he could unveil extra particulars of his marketing strategy for Twitter then, the sources stated.

Musk has additionally lined a up a brand new chief govt for Twitter, one of many sources added, declining to call the identification of that particular person. He advised Twitter’s chairman Bret Taylor earlier this month that he doesn’t believe within the San Francisco-based firm’s administration. Parag Agrawal, who was named Twitter’s chief govt in November, is predicted to stay in his position till the sale of the corporate to Musk is accomplished.

Musk has been inundated with provides from potential fairness companions to affix him within the Twitter deal, and he’ll resolve within the coming weeks if he groups up with somebody, one of many sources stated. It’s unlikely that Musk would associate with a personal fairness agency provided that the deal shouldn’t be structured as a conventional leveraged buyout, the supply added.

Musk disclosed on Thursday he offered $4 billion price of Tesla shares, a transfer possible aimed toward serving to finance his deal for Twitter. learn extra

The Tesla chief govt additionally advised the banks he’ll search moderation insurance policies on the social media platform which might be as free as potential inside the authorized constraints of every jurisdiction Twitter operates, the sources stated, a place that he has repeated publicly.

The $13 billion Twitter mortgage is equal to seven occasions Twitter’s 2022 projected earnings earlier than curiosity, taxes, depreciation and amortization. This was too dangerous for some banks who determined to take part solely within the margin mortgage, the sources stated.

One more reason some banks opted out is as a result of they feared Musk’s unpredictability may lead to an exodus of expertise from Twitter, harming its enterprise, in accordance with the sources.

A Twitter spokesperson didn’t reply to a request for remark.

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Reporting by Krystal Hu in New York and Anirban Sen in Bengaluru
Enhancing by Greg Roumeliotis and Sam Holmes

Our Requirements: The Thomson Reuters Belief Rules.

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