Home App Elon Musk denies considering offering $3 billion in new Twitter shares to...

Elon Musk denies considering offering $3 billion in new Twitter shares to pay off debt

0

Tesla CEO Elon Musk chose to finance his acquisition of Twitter last year through a combination of equity and debt financing, owing $13 billion in debt. Recent sources say Elon Musk’s team has been discussing offering up to $3 billion worth of new Twitter shares to raise money to help pay off some of that debt.

However, Elon Musk has just refuted the report. When one of his followers shared the news on Twitter, Elon Musk responded with a single word: “No.”

Last November, Elon Musk said Twitter had suffered a “significant drop in revenue” and was losing more than $4 million a day. He also said that month that the company was at risk of bankruptcy, but Elon Musk later became more optimistic about the company’s prospects, saying he expected Twitter to roughly break even on cash flow by 2023 because he had laid off about 6,000 employees.

Fidelity Investments, one of the co-investors backing Elon Musk’s acquisition of Twitter, has written down its stake in the company by 56 percent, public documents show, suggesting it will be extraordinarily tough for Elon Musk to raise money from outside investors at the initial valuation. The bank that provided him with the $13 billion loan has not yet received any formal notice of repayment, people familiar with the matter said.

Twitter’s unsecured bridge loans, totaling $3 billion, are the most expensive part of the $13 billion in debt Elon Musk incurred to buy the social media company. They carry an interest rate of 10 percent plus a secured overnight financing rate, a benchmark rate that has spiked in recent months and now stands at 4.3 percent.

On Dec. 13, Elon Musk tweeted, “Need to beware of debt in volatile macroeconomic conditions, especially as the Fed keeps raising rates.”

Exit mobile version