Elon Musk says he'll cut jobs at Twitter, make money from tweets: Reports
Musk had to persuade the banks that Twitter generated enough cash flow to cover the loan he was seeking. In the end, he got $13 billion in loans secured against Twitter and a $12.5 billion margin loan secured against his Tesla Inc (TSLA.O) stock. He promised to pay the balance of the consideration with his own money.
FollowElon 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 a bid to cut costs, and that he would develop new ways to monetize tweets, according to three people familiar with the matter. Musk made the pitch to the lenders days after submitting his offer to Twitter on April 14, the sources said. His April 21 filing of bank pledges was critical in Twitter's board accepting his "best and last" bid.
Musk had to persuade the banks that Twitter generated enough cash flow to cover the loan he was seeking. In the end, he got $13 billion in loans secured against Twitter and a $12.5 billion margin loan secured against his Tesla Inc (TSLA.O) stock. He promised to pay the balance of the consideration with his own money.
According to the reports, Musk's pitch to banks was more about his vision than hard pledges, and the exact cost reduction he would seek once he buys Twitter are unknown. According to the sources, the proposal he detailed to banks was lacking in depth.
Musk also used Twitter's gross margin, which is substantially lower than competitors such as Meta Platforms Inc's (FB.O) Facebook and Pinterest (PINS.N) in his presentation to banks, suggesting that this gives plenty of room to run the firm in a more cost-efficient manner.
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According to one of the sources, Musk will not make job-cut decisions until he takes over the firm later this year. He proceeded with the acquisition despite not having access to sensitive information about the company's financial performance and headcount. According to the sources, Musk informed the banks that he also aims to build features to increase company income, such as new methods to monetize tweets that contain significant information or go viral.
According to the sources, Musk, whose net worth is estimated to be $246 billion, has suggested that he will assist the banks in selling the syndicated debt to investors, and that he may reveal additional specifics about his business strategy for Twitter at that time.
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